1031 Exchange Explained
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Increase the earning power of your investment property with a 1031 Exchange. In this deck, you'll learn what a 1031 is, the benefits, and how you can use it to build a real estate strategy with single family rentals.
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1031 Exchange Explained
- 1. Copyright 2015 HomeUnion, All Rights Reserved Increase the Earning Power of Your Investment Property with a 1031 Exchange
- 2. Copyright 2015 HomeUnion, All Rights Reserved What is a 1031 Exchange? An investment strategy for selling a qualified property, and then proceeding to acquire another qualified property within a specific time frame.
- 3. Benefits of a 1031 Exchange: Tax Benefits • The Capital Gains Tax - Short term capital gains tax • investment held less than one year (based on tax bracket) • long term capital gains tax Investment held longer than one year 0-25% federal tax (based on tax bracket) - Recapture of depreciation tax - flat 25% Copyright 2015 HomeUnion, All Rights Reserved
- 4. Benefits of a 1031 Exchange: Summary • Increase portfolio of wealth • Change type of investment property • Move and exchange your investment property to a new location • Updated depreciation schedule for your investment property Copyright 2015 HomeUnion, All Rights Reserved
- 5. Copyright 2015 HomeUnion, All Rights Reserved You Can Also Diversify Your Exposure & Risk
- 6. Strategy to Maximize Cash Flow Maximize Cash Flow You can increase your cash flow by 3 to 5 times! Diversify Your Risk You can diversify your risk by investing in multiple SFR investment properties across the US instead of one! No Taxable Event You can defer capital gains tax by using a 1031 Exchange! We work together with the nation’s largest direct and fully managed single-family real estate platform. They source the highest yielding cash flow properties using advanced analytics and then manage the property end to end, opening up this amazing market to investors like you. Call 1-800-555-5555 Did you know that asan owner of an investment property you have these wealth accumulation opportunities? 7.5% 500K in Current Strategy *Depends on leverage Avg. Annual Cash Flow Annual Positive Cash Flow, After Expenses 1Property, Self-Managed or Property Manager 500K in Max Cash Flow Strategy 5-15* Fully Managed High Cash Flow Properties $7,5001.5% Avg. Annual Cash Flow Annual Positive Cash Flow, After Expenses $37,500 VS. • Diversify Your Risk • Maximize Cash Flow • No Taxable Event Maximize Cash Flow You can increase your cash flow by 3 to 5 times! Diversify Your Risk You can diversify your risk by investing in multiple SFR investment properties across the US instead of one! No Taxable Event You can defer capital gains tax by using a 1031 Exchange! We work together with the nation’s largest direct and fully managed single-family real estate platform. They source the highest yielding cash flow properties using advanced analytics and then manage the property end to end, opening up this amazing market to investors like you. Call 1-800-555-5555 Did you know that asan owner of an investment property you have these wealth accumulation opportunities? 7.5% 500K in Current Strategy *Depends on leverage Avg. Annual Cash Flow Annual Positive Cash Flow, After Expenses 1Property, Self-Managed or Property Manager 500K in Max Cash Flow Strategy 5-15* Fully Managed High Cash Flow Properties $7,5001.5% Avg. Annual Cash Flow Annual Positive Cash Flow, After Expenses $37,500 VS.VS. Copyright 2015 HomeUnion, All Rights Reserved
- 8. Time Requirements • Identification of Replacement Property - 45 days from the close of the relinquished property to identify replacement properties. Copyright 2015 HomeUnion, All Rights Reserved • Acquire the Replacement Properties - 180 days after the close of escrow OR - April 15th (or date taxes are filed), whichever comes first
- 9. Copyright 2015 HomeUnion, All Rights Reserved Timeline Day 0 Close of Escrow 45 Days* Identify Property(ies) 180 Days Closed on New Property *No extensions
- 10. Replacement Property Requirement • The Three Property Rule - Maximum of (3) replacement properties without regard to fair market value Copyright 2015 HomeUnion, All Rights Reserved OR… • 200% Rule - If more than (3) properties, the total aggregate value of all replacement properties cannot exceed 200% of the relinquished property value
- 11. • Example of 200% Rule Replacement Property Requirement (cont’d) Copyright 2015 HomeUnion, All Rights Reserved
- 12. Exception to 200% Rule • 95% Rule - If too many properties are identified, you must acquire 95% of the total value of all identified properties to still qualify for an exchange Copyright 2015 HomeUnion, All Rights Reserved
- 13. Exchange Funds • Buy properties of equal or greater value of relinquished property • Assume the same amount of debt $$$ - New cash offsets new loan - Too great of a loan • Use the proceeds/cash in the new property/properties Copyright 2015 HomeUnion, All Rights Reserved
- 14. Summary • 1031 Exchange is a tax code • Upgrade properties w/o a taxable event • Increase the value of your holdings • Increase cash flow
- 15. HomeUnion Real Estate Investment Management Firm Select Acquire Manage Track Perform ance Sell When Ready Copyright 2015 HomeUnion, All Rights Reserved Select Acquire Manage Track Perform ance Sell When Ready Select Acquire Manage Track Perform ance Sell When Ready Select Acquire Manage Track Perform ance Sell When Ready Select Acquire Manage Track Perform ance Sell When Ready
- 16. Copyright 2015 HomeUnion, All Rights Reserved To learn more, call a Real Estate Solutions Manager at 1-866- 732-3220 OR Schedule a free consultation at
Notas del editor
- Not only increase your cash flow, but Diversify your exposure and risk to multiple markets.
- Little known strategy that some of our more savvy investors use… Talk about this strategy that some have taken advantage of as a savvy RE investors.
- HomeUnion identifies properties quickly in markets across the country. We also help acquire them in a short time frame, and take care of all the management, reporting, etc. We can help you use a 1031 Exchange.
- Debbie and I will take your questions… Will try to get to all of them…