San Diego Investment Property

1031 Exchanges – Investment Property In San Diego
Contact The San Diego Real Estate Professionals

In a nutshell, the 1031 Exchange allows a San Diego property investor to sell one or more properties and use the proceeds to buy different property without paying capital gains tax on the initial sale. So the investor who purchased a San Diego beachfront condominium for $500,000 three years ago can now sell it for $900,000 without paying capital gains tax on the $400,000 gain. Instead the entire $400,000 is used as a downpayment on a new home that is valued at more than $900,000. The mechanism is a great way to switch between property types – i.e. condominium to single family home, or single family home to apartment building.

The timing of the 1031 Exchange is simple. When your San Diego investment property is sold (close of escrow), the proceeds from the sale of the property are held to purchase a replacement property. The replacement property must be identified within 45 days after the sale. The purchase of the replacement property must be formally completed within 180 days after the original property was sold.

Some San Diego property investors prefer to find a replacement property before selling their current real estate holding(s). The Reverse 1031 Exchange allows the investor to purchase the replacement property first, then sell. For example, the person who purchased Del Mar home for $750,000 thinks the house is now worth $1,750,000. An oceanfront duplex becomes available for $2,500,000. The investor may buy the oceanfront duplex. Within 45 days after the purchase the investor must put the Del Mar home up for sale. The Del Mar house must be formally sold within 180 days after the oceanfront duplex was purchased.

The 1031 Exchange rules are very strict with timing. This is a San Diego real estate guide. We recommend that you consult a tax professional to determine how the tax laws will apply to your situation. There are restrictions involving sale of property to related entities, family members, and partnerships. Some types of sales may be disqualified. These rules don’t apply to the sale of a home or personal residence. Your San Diego real estate professionals will answer questions and provide references to service providers who will be critical to completing the 1031 Exchange.

Your personal real estate consultant will guide you through the home selling process to make sure that you maximize your real estate investment.

Other resources are available at:

• IRS Real Estate Tax Tips For 1031 Exchanges
• National Association Of Realtors Field Guide To 1031 Exchanges
• Take advantage of these San Diego real estate resources:
• A Personal Consultant Will Bring You About 10% to 15% More Money For Your San Diego Property
• A Simple Checklist GUARANTEED To Increase Your Selling Price By $10,000.00 or more!
• How To Insist Upon Added Professional Services At No Cost When You Sell Your Home.
• Information on Financing and Refinancing
• A Home Seller’s Worst Fears, And How To Eliminate Them