Commercial property owners have the opportunity of generating more monthly income by switching to a more profitable real estate holding. While the traditional method of purchasing a commercial building can involve a lot of monetary concerns, any of them revolving around tax payments, owners now have the chance to upgrade through a 1031 swap. 1031 exchanges offer you the possibility of deferring taxes, so naturally this option might have aught your interest for a while now. However, there are a few things you need to know a do in order to access the benefits of this program. Here are the tips you should follow:
Learn about the Delaware Statutory Trust
In order to actually pursue the process by the book and manage getting the advantages you have the chance to, leaning about the Delaware Statutory Trust will be necessary. Research the topic thoroughly and find out all the rule of this program, the regulations you need to adhere to and what eligibility factors you need to meet. Basically, make sure you have the answer to this question: What is a Delaware statutory trust?
Find a property replacement on time
Waiting too long since you have sold your current property utile finding the one you want to replace it with can make you no longer eligible for the swap. It’s important to be aware of the duration limitations and to complete the exchange on time – not doing that will only obligate you to pay the taxes you are trying to escape.
Hire the right intermediate
For any 1031 exchange, you will need to work with an objective third party that will be responsible of keeping a hold of the money. Because the job of the intermediate is quite an important one, select the right person for the job with precise care. Look for someone trustworthy, experienced and responsible who you know will not cause you inconveniences.
Consider management responsibilities
When you are analyzing your options in terms of properties, seek one that will not only help you access more profits, but will lower your management responsibilities as well. For you to manage growing your career, and becoming more successful, you need to have enough time on your hands. A property might generate appealing monthly incomes, but if it comes with difficult management requirements, it’s best if you just go another way.
Repeat the process in the future
Last but not least, if you truly want to build wealth throughout your career, give up on traditional property purchases, and always get your real estate holdings through this program. As soon as you sell traditionally the property you have obtained through the exchange, the taxes you have deferred will need to be paid – so instead of being subjected to them, simply continue growing your holdings through this method.
Growing your profitability while easing management responsibilities is possible if you choose to swap your property using the 1031 exchange program. However, in order for the overall process to be a success, you will need to be aware of a few things. These tips will allow you to master your first exchange, and get the insights necessary to consider this property upgrade in the future. So, analyze each factor carefully, and make sure to handle everything by the book.