While performance of the broader equities market remains uncertain, traditionally, real estate has more reliably stood the test of time, delivering solid returns and a cashflow positive income stream for investors.
For those involved in real estate, the 1031 exchange offers significant advantages, allowing the deferral of capital gains tax and depreciation recapture, and providing an opportunity to reinvest the proceeds from the sale of one property into another.
According to Pivot Professional Partners, despite the many advantages of a 1031 exchange, this strategy is not without its challenges, with minor mistakes potentially causing significant headaches and financial loss.
This quarter, Pivot Professional Partners, a leader in wealth preservation, the 1031 process, and DST and TIC investments, offers insight into properly executing a 1031 exchange to capture all of its benefits with none of the downside.
Expertise Clients Can Trust
A 1031 Exchange is a complex process, requiring adherence to a several rules and regulations in order to capture the benefits without running afoul of tax laws. Since its inception, Pivot Professional Partners has helped clients successfully navigate these murky waters, effectively executing 1031 Exchange strategies that deliver incredible value.
Clients of Pivot Professional Partners gain access to a dedicated team of talented professionals who are passionate about helping clients understand what properties are a good fit for a 1031 Exchange.
Taking a client-centric approach to business, the team works hand-in-hand with each client to develop a custom-tailored financial strategy and which options best fit their budget, timeframe, goals, and expectations.
The Advantages of a 1031 Exchange
The sale of an investment property normally results in significant tax liability on capital gains. Although the exact amount of liability incurred is dependent on the income tax bracket of the owner, the average investor could expect to pay between 15-20% on capital gains. Depending on the jurisdiction, an investor may also have income tax and/or state tax liability on the transaction.
Pivot Professional Partners helps clients defer such taxes, using a legal tax strategy known as a 1031 Exchange, offering a myriad of benefits including wealth preservation and leverage among other advantages.
The Benefits of a 1031 Exchange
Tax Deferral & Wealth Preservation
According to Internal Revenue Service (IRS) Code Section 1031, an exchange deferral allows for the deferral of capital gains tax and depreciation recapture tax liabilities.
Enhanced Leverage and Purchasing Power
The sale of a property without the added liability of taxes boosts leverage by increasing buying power in order to acquire a more expensive/valuable replacement property. At an estimated capital gains tax rate of 20%, and depreciation being recaptured at 25%, tax deferral can result in a significant increase in buying power when acquiring a new property.
Diversification and/or Consolidation
Offering incredible flexibility, investors utilizing a 1031 Exchange strategy can exchange one property for another (or several properties), or consolidate multiple properties into one larger purchase. For example, Pivot Professional Partners says an investor may be able to exchange three duplexes for a retail strip center, or pivot to take advantage of a specific growth sector in real estate.
Reduce Operational Costs and Managerial Headaches
Investors who own several properties often face significant managerial burdens and/or costly operational expenses. Maintenance and repairs, insurance, and more can all eat into the bottom-line ROI. With a 1031 Exchange, clients can exchange and consolidate high-cost, high-maintenance properties for an apartment building or similar.
Increased Cashflow / Income
Savvy investors may opt to exchange a non-income-producing property, such as a vacant land parcel, for an income-producing rental property, increasing cashflow without incurring additional tax liabilities.
About Pivot Professional Partners
With a focus on education, experience, and expertise, Pivot Professional Partners offers consulting, advice, and guidance on the successful implementation of retirement plans, tax deferral strategies, 1031/1033 Exchanges, DST/TIC investments, alternative investments, and opportunity zones.
Backed by a strong track record of successful client outcomes and developing strategies that deliver strong returns, the company has stood out among a sea of competitors as the imminent leader in its field.
Committed to its foundational pillars of integrity, and going above and beyond with customized solutions for every client, its track record of demonstrable results remains the driving force behind everything they do.
Those interested in learning more about the company or in scheduling a consultation, are encouraged to reach out via its official website or by calling 631-275-1444.
Media ContactCompany Name: Pivot Professional PartnersContact Person: Jon Paul CirelliEmail: Send EmailPhone: (631) 275-1444Address:4600 N Military Trail Suite 224 City: JupiterState: FloridaCountry: United StatesWebsite: https://www.pivotprofessionalpartners.com/
