If you are an investor who has decided to sell an investment property, you should certainly consider a powerful tax deferral tool provided by the United States government.
Section 1031 of the IRC allows owner to sell an investment property, defer 100% of the capital gains by reinvesting the proceeds into a “like-kind” investment.
Any property that has been held as a business, trade or investment qualifies for a 1031 Exchange. Two of the most common choices are the following:
1) Tenants In Common, or also known as a TIC investment enables a group of up to 35 investors to co-own a single real estate investment. TIC investments usually share the following features:
-The minimum equity usually ranged from $250,000 and up
-Each co-owner is a direct owner whereby they all share based on a pro rata share of income, appreciation of the property and all tax benefits.
-Each co-owner has the option of selling, gifting, willing his portion.
-Loans are usually already in place generally in the range of 5-13 years.
There are substantial benefits to owning a TIC Property, to list a few are:
-An investor can acquire with as little as $250,000 an institutional grade property.
-Monthly cash flow dividends
-Sheltered tax benefits
-Deductive Interest
-Zero management responsibilities
-Instead of putting all your money in one property, you can take diversify into high quality projects thereby diversifying by property type and geographic location.
-Extensive due diligence has already been conduced by the real estate sponsor, securities industry and the lender so that you already have all the information regarding the property without spending any money.
2) Free standing Triple Net Properties are very popular 1031 Exchange Properties.
The typical triple net property is a national retailer, such as Walgreen’s, Home Depot, McDonald’s, US Bank, Lowe’s, Best Buy, AutoZone just to name a few.
Some common qualities include:
-Long term leases giving investor’s dependable income
-A+ real estate locations
-High quality tenants giving you peace of mind
At present the cap rates range between 6.5-9.0 depending on the quality of the tenant, location and the years remaining on the lease.
Andrew Gitt is co-owner with Westwood Net Lease Advisors which focuses on selling 1031 Exchange Properties Nationwide. To learn more about
1031 Exchange Properties please visit his blog for Listings and Sales Comps and be sure to email Andrew requesting more information.
http://1031exchangeproperties.wordpress.com<
