1031 Tax Exchange - get rid of junk houses increase your Equity

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Has anyone done a tax deferred 1031 exchange? 

• What a great way to increase the quality and equity from your portfolio.

• Suppose you have a stable of 5-10 properties, maybe low income and there is about $100,000 in potential equity.

• You could offer those properties for sale subject to a 1031 tax deferred exchange. Now go find a property you want, maybe in a better neighborhood or a commercial property.

• You make an offer to buy the replacement property subject to the sale/exchange of your properties. The rule is that the replacement property needs to be equal or greater value.

So thanks to an old IRS 1031 rule, you can sell your old properties without paying capital gains if you exercise the 1031 and follow their rules. (I am writing about general terms, there is lots to know about this process, you should research it for yourself if you think you want to do this).

I did one about 7 years ago where my tax would have been $40,000, I did an exchange for a house in Florida, it turned out wonderfully, I saved the $40,000, increased my equity and cash flow, which means I was able to buy at a greater value and not have to kiss that $40,000 good bye!

Here is something else worth considering about doing 1031's, as an investor you can sell the exchange properties for less and pay more for the replace property. This is because the savings in taxes you do not have to pay.

Charles