Posted on: 3 March 2022Share
If you are currently a rental property owner and are looking for a way to upgrade your investments without spending a bunch of cash out of pocket, a rental property 1031 tax delayed exchange may be just the opportunity that you are looking for. This is because a 1031 tax delayed exchange has the ability to help you increase your buying power, your wealth, and your monthly income without the need to spend additional money out of your own pocket. Continue reading to learn more about how these tax delayed exchanges work and how they can help you to upgrade your current investments.
Increase Your Buying Power
Rental property 1031 tax delayed exchanges are designed to help you purchase a new rental property without the need to spend a fortune out of your own pocket. This is accomplished by allowing you to defer your tax obligations when selling a rental property as long as you reinvest these funds in a new rental property. What this means for you, is that you will be able to take the total amount of funds received from the sale of your existing property and use these funds to purchase a new rental property. Since you will not be required to pay taxes at the time of the sale, you will have more money available to invest in an upgraded property.
Increase Your Wealth
Assuming that you got into real estate investing in order to turn a profit, this particular benefit is likely to be quite appealing to you. Since rental property tax delayed exchanges provide you with the power to purchase more valuable properties without the need to invest additional capital, these exchanges make it very easy to increase your overall wealth by increasing the value of your investments. Since higher quality rental properties will command a higher monthly rent, this benefit can also help to increase your passive income each month.
A Final Thought
While there is no law that states you must seek the services of an attorney or tax professional in order to complete a rental property 1031 tax delayed exchange, it is always best to make sure you have a professional in your corner when taking advantage of this tax deferment opportunity. This is because there are several deadlines and other guidelines that must be met in order to successfully complete your tax exchange. A failure to seek professional help with executing this exchange could result in you missing your opportunity to expand your buying power and increase your wealth.
Contact a tax professional in your area for more information about Rental Property 1031 Tax Delayed Exchanges.