A recent customer of mine owned several rental homes near his home up north. As he is nearing retirement age, he is planning to relocate to Central Florida when he does.
His investment properties have done well for him over the years he has owned them and they had gained a bit of equity. The problem was, if he sold them he would pay capital gains on them. The answer - a 1031 Tax Deferred Exchange! Using the proceeds from the sale of two properties he was able to exchange them for a qualified replacement property in Orlando, deferring the gains for the future. The process is not difficult but it does have specific timeline and procedural rules that must be facilitated by a professional tax adviser or Qualified Intermediary (QI).
After serving as an income producing rental property for a couple of years, the beautiful home will be his to enjoy in retirement. He liked the strong rental market that Central Florida enjoys too. What a powerful wealth-building tool!
If you own income properties you may want to consider if a 1031 Exchange is right for you. If you don't have investment property maybe this is a good time to buy one. Have questions? Reach out - I'll answer.