1031 exchanges

A follow-up from the post the other day about owning rental properties. I’m hoping if you are already in the game you are familiar with 1031 exchanges. These are otherwise referred to as tax-deferred exchanges. In short, you can sell an investment property and buy another with that money, this defers the tax on your sale because you have decided to continue to purchase an investment property. The government tends to favor real estate with certain tax advantages, rather than try to spend their own money to improve our low-income housing. Investment property owners need to jump all over this tax advantage and use it to their advantage. Have you been sitting on some single family properties for a while and want to take the leap something bigger? NOW is the time with the low mortgage rates. Make sure you read up and research 1031′s before making any decisions, there are many rules to follow.

Check out some FAQs about 1031 exchanges on the IRS website: http://www.irs.gov/newsroom/article/0,,id=179801,00.html