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No one wants to pay taxes, especially if there’s a smart financial solution that can save you money. A 1031 Tax Deferred Exchange is a well-established strategy used to defer taxes on the sale of a home or business by purchasing another property. It has become increasingly popular with real estate investors.

1031 exchanges are pretty common in Mammoth Lakes as often people are selling properties in other locations and purchasing here. Or, as is the case of a current client, he’s selling his one-bedroom Mammoth condo and upgrading to a two-bedroom condo.

If you’re buying a property that specifies it has a 1031 exchange condition, it won’t affect you. Only sellers need to think about 1031 exchanges.

Here are the top four things you need to know about 1031 exchanges:

1. They can give you a 100% deferral of federal and state capital gain taxes.

If you buy a property that’s greater or equal value to the property you’re selling, a 1031 deferred tax exchange can defer capital gains taxes on the sale property. A properly structured exchange will be interest-free.

2. They can give you leverage to increase the value of your property portfolio.

Selling a property with equity for a more leveraged, more valuable one that produces more cash flow and greater depreciation benefits will increase your overall return on investment. In other words, you come out ahead. The client I mentioned above is selling a property with quite a bit of equity for another more expensive one, and the new one will generate more rental revenue and bigger depreciation for him, thus giving him a higher ROI.

3. They facilitate diversification.

Using a 1031 exchange allows you to diversify into new geographic markets or switch from a commercial property investment to a recreational property investment.  For example, sell your beach house or big city apartment building and buy a Mammoth condo.

4. They can help with estate planning.

Selling a large property to buy several small properties can make distributing your real estate assets to family members easier.

A 1031 exchange may or may not be the right move for you — check with your CPA for specific details on your situation. A neutral 1031 exchange agent is necessary to facilitate the transaction. Ask me if you’d like a referral for someone I’ve worked successfully with.

 

Learn more about selling your Mammoth Lakes property in my Ultimate Home Seller’s Guide, or read more of my posts about real estate finance. If you’d like to talk, call me at (760) 914-4664.

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If Your Property Needs Major Updating or Repairs, Now Might Be the Perfect Time to Sell It...

More info in my blog, link in bio...

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This weekend is the Flash Fox Trailfest. Mammoth is always coming up with new events and experiences like this. It's so wonderful to live here and be a part of all the fun things going on locally.

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Summer flights are here!

Fly with Advanced Airlines from Hawthorne (HHR) or Carlsbad (CLD) directly into Mammoth Lakes this summer between June 16 and September 12, 2022. United Airlines is offering flights into the Eastern Sierra Regional Airport in Bishop (BIH) this summer. Fy June 24 through September 5, via San Francisco daily except Saturdays.

See you in the mountains!

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The lakes basin is one of my favorite places to hike. There are so many hidden gems and places to see back there and always a new adventure to find for yourself and your hiking partner (John of course!)

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Not ONE but TWO OPEN HOUSES
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For full listing details: LINK IN BIO
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That is one way to get out of paying taxes! Crazy!

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The brain of a Realtor® never stops, trust me!

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They say things happen for a reason and that is absolutely true with this sale. My buyer clients were disappointed when they missed out in a multiple offer situation earlier this year. I believe it happened for a reason -- this condo is PERFECT for them! Thanks to Mickey Brown and Sierra Escrow or a smooth transaction!

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My dad died in a car accident when I was 18 years old. He was a man of few words but during those 18 years (especially my high school years🤣) he provided plenty of advice. There was an entire "experiment" he watched me perform. I will spare you the details but the lesson was "we are all replaceable." Sounds harsh but it is true and has kept me on my toes and always doing my best -- nothing is guaranteed.

Anxious to hear the best advice you have received from your dad (or dad figure in your life).

Yes....that's me and my dad❣
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Link in Bio...

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If your parents (or another close relative) are giving you money to use toward a down payment on a house, make sure to get a "gift letter" signed by them stating that it's a gift, and not a loan to be repaid. It's also a good idea to have the money in your account months ahead of applying for your mortgage so that the money is "seasoned" in your account.

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