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DID YOU KNOW that you can invest in property AND avoid paying tax? Of course it isn’t QUITE that simple….but today @andrewreese3629 and I talk all about a 1031 EXCHANGE, its benefits and more!
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How to not pay taxes but not break the Law it's called what 10 31 has changed We're gonna talk all about it in today's Video Define it so 1031 exchange to make it Easy is really Uh basically when you buy a property as Long as you Sell that property and buy another Property like kind has to be the same Type of property the government has this Attempt to call the 1031 exchange so you Use an intermediary that manages that 1031 exchange the 1031 exchange so you Never actually physically touched the Money it sits in an escrow account and That's recount with the 1031 exchange Company when you purchase the other Property it allows you to not pay Capital gains on the sale of the first Property now eventually You can continue to 10 30 when it's Changed over and over and over again Eventually when you take the proceeds That's when you're going to pay the Capital teens that's when the government Will be calling so it allows you not Necessarily to not pay the taxes what it Allows you to do is to defer the taxes Until later time yeah government's Thinking is well that later time Generally the taxes would be higher so They're going to get their a bigger Yeah they're gonna get a lie and share a
Bigger piece of it later on because Taxes tend to go up Um but for investors what it allows you To do is to purchase properties not pay The capital gains and roll them into Larger and larger properties and and What I've found in the market here in Sarasota Is that you'll find investors that are You know you're like wait a second this Is an investor buying a residential Piece of property but it's 10 million Dollars well yeah they started out Buying they started it off small with a Half a million yeah like a half a Million dollar property then a million And they just kept 1031 exchanging and All the profits they didn't have to pay Any taxes on because they were Continuing to buy like kind property so Let's let's talk about what is like kind Sure So we want to get right down to what That really means so like kind give us An example so if you're buying like for Example if you're gonna buy a single Family home that you're going to use as A rental property keep in mind these Properties do need to be Um some type of investment so like you Can't just buy it your single family Home live in it you know all year long Not rent it out it cannot be where you Live right so it has to be an investment
Property but as an example if you bought A single family home and you used that And you rented it out to people Airbnb Or long-term care vacation however you Wanted to do it Um when you sold that property you'd Have to buy another single family home That you're using in the same type of Way it could be I mean just to be clear You could get a condo into a home or Home home in a condo right because they Think it's like it still falls into that Like kind um I I think so but I I'm Gonna be honest with you I'm not sure I'm pretty sure like generally speaking Um I would I talk to people I'm like Well look is it like you know you can't Take like a lot and I try this you're Not income producing you're not income Producing Um and then take that lot and Purchase it into it you know bring it Into a house or into a condo so I Generally speaking when I get those Types of questions I'll be the first one To tell you I'm not an expert at this I'm an attorney in or a Tax Advisor or 1031 exchange planner obviously we we're Just Realtors okay so generally I'll Pick up the phone and call one of the 1031 exchanges and say listen this is What my client is looking to do they're Looking to go from a single family home Into a condo or they're looking to go
Um you know there are certain instances Where you can 1031 exchange Lots how It's done and the way it's done and what You can 1031 to change that into Um again I I generally what I would do Is I'd pick up the phone and call one of The 10 30 intermediaries yeah or or We've got real estate attorneys sure That usually Doing that Um yeah I would say but yeah and also in Terms of like moving into the next Property you can also like let's say Let's say it's a million dollars and the Property's only 800 you can take that Rest of the 200 sure you pay on that Part of the gain or whatever correct I Don't know how they calculate that well It literally is if you take that 200 000 You're gonna pay the capital gains on on That 200 Grand That you're cashing out but it's gonna Be based on whatever your income level Is so like if you're if you make a lot Of money and you take that 200 grand out You're gonna pay a lot more in taxes and The next guy or whoever yeah well Usually where people want to talk to Their tax professional is sometimes that Two hundred thousand dollars May throw You into the next higher or two higher Tax categ brackets so you end up paying A lot more money not just on the 200 Grand that you're taking but on the
Income that you produced over the years So these are all kind of considerations That that you have to take into account But You know for example I have a client Right now that purchased a property in Manatee up on the river uh paid about 1.5 or a little bit over 1.5 million Into it he's putting two and a half Million in into it as an investment it Basically will be I mean it's it's Engineer re-engineered um architect Redesigned it's totally redone uh his Intention is to flip out of it Um and then 1031 exchange that that Profit into another property yeah and Potentially continue to do so over and Over and over again Yeah You see because of our natural Southwest coast around here today's a Little bit not so much as we wait for Idalia actually so we're end of the Nearing the end of August here 2023 but Yeah we I love 1039 exchanges they're Fantastic and generally speaking the People that are are getting involved With the 1031 exchanges are typically Investors that are doing this over and Over and over again which for us is Obviously a fantastic situation when you Look around at some of the most Successful agents in our office Um you know and the one that obviously
Pops into mind right off the bat is Charles Bucky sure Charles has a a large Handful of I think seven to ten guys That are investors and he literally just Spends a lot of his time finding Great lots that are Waterfront or really Great lots and great locations for them To build and then their 1031 exchanging Through all these properties and some of His guys have I mean the the property 104 Sunset that was the 25 million Dollars did a video on that so check it Out yes so that beautiful home that's That's one of his investors it's done It's 1031 exchanging Um uh properties of projects that he Does every year so I think for us as as Realtors it's you know these are the Great client staff we enjoy it that's a They're fun and they're fun projects I Mean my my Um investor with the project up on the River you know it's a totally new house And it's a really large property uh you Know he'll be into it for for somewhere Between three and four million dollars Uh we plan on listing it at close to Eight so there's a huge profit Um there for him and there's gonna be a Lot of money and he doesn't want to pay The taxes on it it's a great way to do It it's a 1031 exchange it's a defer the Taxes yeah and not to die for it but There's going to be a demand for
Something like that that's so unique and Very and unique and all that good stuff I know back to what you said I know um You mentioned sometimes Charles has People that buys Lots I have one I Happen to have one in Gulf of Mexico and The 6000 block it's a half acre It's in that market and it's ready to Get you know build your dream home Custom Dream Home and that was on on the Canal correct it is there's a there's 42 Feet of water Frontage there again not To divert but we do sell real estate Here yeah so it's uh yeah that that Would be a great opportunity that would Be a great opportunity so we could Purchase a lot build a home and and Quickly sell it and flip it and then Again 10 30 wanted into the next project You know no because we're talking about It but by the way it's listed for one Call me about it the cool thing about That is like most of the plans already Done it's not to permitting or anything Like that but like the Lion's Share of The floor plan is kind of completed with TJ Nutter TJ Nutter is a fabulous custom Builder okay anyway back to 1031 Exchanges so so I mean it's a great Option yeah it's a great option I I Think that for investors it really Allows you to start small make some Money not have to pay a huge amount of Taxes on it and to take that money and
Continue to roll into larger and larger Projects you know and obviously with With Florida real estate Um you know I just sort of tell people Yes it can be volatile go up really high And really low but over time generally Speaking it is an upward slant of Profits so if you can get into the Market especially into the larger um Price points they're they're substantial Profits that can be made yeah people say Like the real estate market never goes Down well yeah it does I mean it adds And flows like any place where you can Make money Um over the Long Haul but I always Advise people to go think long term when It comes to real estate 100 Exchange or whatever your goals are even If you're I mean moving for the Lifestyle whatever long term is always The goal I mean over the long term if You look at Um you know if you look at properties Here in Sarasota County over time it has Really just been a steady flow upwards And yes you had 2008 and 2010 where the Market just got hammered here in Florida And yes there's a Steve decline but Quite frankly everything is recovered From then and plus so if you stuck out You know through that tough time and Said no I'm going to stay in the Property
Um Did quite well Tough times to create tough people right We've definitely been through some tough Times and stay tuned for end of month Market update that we do every single Month because we feel like it's really Important to let people know about that That video is coming up and watch every Every month at the end of the month so You're in tune with what the Sarasota Area Market is doing Um thank you for watching we want to Hear from you absolutely you can call us Text us email us we went if you just Want to talk about the market although The videos are great there's nothing Like you know face to face absolutely Conversations sure Um we want to come to your homes and Give you an accurate update on your Equity right so for example Zillow if You look on Zillow sometimes it's dead On a lot of times it's really off either Really too high or really low Um Shayla and I are actually going on a Listing appointment today and my number Is over a million over what Zillow has Estimated on zillow's you know zestimate And so hopefully we'll be giving someone A pleasant surprise with that listing Appointment so you need boots on the Ground you need someone like us Hopefully you call us we would love to
Hear from you yep and you can feel free To reach me anytime on my cell my cell Phone number is 941-586-2460 and mine is 941-544-7690 you can email me Shayla Twit gmail.com or click the link below Shayla twitch.com
