Everything You Need To Know About The ‘Reverse 1031’ Tax Workaround

Everything you need to know about the 1031 reverse tax workaround
Real estate investors have been using conventional 1031 Exchanges to swap buildings and hurdle big chunks of capital gains taxes. But 1031 Exchanges come with a tight timeline that’s hard to abide by in these market conditions. So here’s Bisnow’s breakdown of a spin on the 1031 that lets buyers duck its normal deadline.
Everything You Need To Know About The ‘Reverse 1031’ Tax Workaround

Fast Facts:

  • 1031 exchanges let investors save up to 30% in capital gains tax on a sale by deferring the tax bill tax free onto another property within a six-month deadline.
  • In a seller’s market, finding a buyer is pretty straightforward. It’s finding a good deal for your 1031 credit that becomes tricky—especially within the tight deadline.
  • To get around that, so-called “reverse 1031” exchanges let buyers snag their replacement property before selling the old asset.
  • In a reverse 1031, seller puts the funds from their sale directly into another building, rather than taking it in as income.
  • Still under the radar for most investors, the reverse 1031 helps in a seller’s market, where high prices, tight lending guidelines and compressed cap rates make it tough to find a replacement.
  • Reverses aren’t for everyone—they work best in the high-end market with big-name clients.

The Reverse Process

Read more at: https://www.bisnow.com/national/news/commercial-real-estate/everything-you-need-to-know-about-this-new-tax-workaround-reverse-1031s-55705?utm_source=CopyShare&utm_medium=Browser

To discuss commercial mortgage financing needs contact Liberty Realty Capital Group

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