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Unlock Your Wealth
Many property owners find themselves trapped by management responsibilities while earning only a fraction of the monthly income they desire. With good investment planning they can frequently double and sometime triple their monthly income, reduce the risk of their investment portfolio, and minimize management responsibility -- all while avoiding taxes in the process.
This article addresses how investors can reposition their portfolio and literally change their lives with significantly greater income, security and peace of mind.
I Preservation of Equity
A properly structured 1031 Exchange provides real estate investors with the opportunity to defer 100% of both Federal and State (if applicable) capital gains taxes on the sale of their existing properties. In effect the 1031 Exchange is a tax free loan that allows the investor to continue to reposition assets and build wealth with money that would otherwise be lost to taxes as they exchange into progressively more desirable properties.
II Increase Income and Tax Deductions
Many investors exchange from a property where they have a high equity position or one that is “free and clear” into a more desirable property where they may take on some new debt. A larger property can produce greater cash flows, the opportunity to more rapidly build up equity, and increase the tax shelter that greater depreciation can provide.
III Diversification
Real estate investors make their money by concentrating their wealth in a given area; they keep that wealth by diversifying. To fully diversify and protect the wealth they worked so hard to build up the investor should diversify by geography, asset class (retail, multi family, office etc.) and by risk category.
IV Management Relief
Frequently investors have created wealth through management intensive asset classes such as multi family or single family rentals. While this is an excellent way to create wealth investors can reach a time in their lives where they have “had enough” and want to enjoy the fruits of their labor. By switching asset classes to net leased properties (the tenant does all the management and the owner receives a monthly check with little to no involvement in the property) or to a synthetic net lease investment (tenant in common or similar) the owner can enjoy the benefits of real estate ownership while avoiding burdensome management responsibilities.
V Estate Planning
Capital gains taxes are forgiven and a new basis is established when a property is passed from one generation to the next. A diversified portfolio of properties that requires little or no management has the flexibility to designate specific properties for heirs who might not have the time or the inclination to manage real estate.
As with any investment decision it is important to consult your tax and or legal professional to make sure the investment fits your needs.
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