PRIMER ON A 1031 EXCHANGE with Charles Dobens

[Brett P Swarts]

Charles Dobens:

Let's start with that element that probably everybody understands, a 1031 exchange. Go ahead and give me a primer on the 1031 exchange.

Brett Swarts:

Well, the IRS and the government, give us different legal loopholes to defer tax in order to spur the economy and keep money flowing. So 1031 is one of those tools, which allow someone to trade like-kind real estate into like-kind real estate of equal or greater value within a

Charles Dobens:

Like-kind of real estate or like-kind investments because real estate would be like-kind but an antique car collection may not be.

Brett Swarts:

Yeah. Charlie, your listeners may not know, but with the recent Trump Tax Plan, they made it even more specific. So it's basically at this point, commercial real estate investment, real estate for investment, real estate become even more narrow. As you know, they may take it away in future administration to make enough. They see it as a way to pay for some of the 22 trillion in debt that they have. But it's a legal way to defer capital gains taxes as long as you roll it into equal or greater value within a period of time. Typically, most of our clients, pick the three to three property rule, which means they identify within the 45 days, three properties, and they close on all one, two, or three of those within 180 days. Now, remember, we have to replace the debt, and we and basically the purchase price. So that's the other thing. You're staying in the debt and you're staying in the marketplace, but it's an excellent tool, especially if you're a commercial real estate owner who can find a value add forced appreciation opportunity.

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