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Investment Property: Is your investment property keeping you from doing the things you love?

Posted by Pete Sabine on October 15, 2007

Are you looking for an opportunity to defer capital gains tax and retire from managing your income property? Many income property owners are comfortable with real estate investments and have had good returns in the past, but they do not like the daily management headaches that accompany property management. If so, discover the benefits of a 1031 tax deferred exchange and the tenant-in-common exit strategy.


Internal Revenue code section 1031 provides an excellent strategy for the deferral of capital gain, which would ordinarily arise from the sale of income real estate. Exchanging defers the tax, leaving the property owner with substantially more proceeds with which to purchase a replacement property, gain greater leverage, diversification, improved net cash flow, geographic relocation or property consolidation.


A 1031 exchange is a three-way transaction in which an intermediary is used to facilitate the transaction. The exchange allows the investment property owner to exchange their management-intensive property for professionally managed real estate with the potential to generate steady income tax benefits and appreciation.

When the exchange is complete, you will own a tenant-in-common interest in one or more quality income properties. Your income from the replacement property will likely be higher than you were receiving from your relinquished property.


Some of the benefits from this solution include:

  • Increase your depreciation tax credits

  • Increase your net asset value and invest in high quality multi-unit apartment properties with possibly no cash out of pocket

  • Capture profits from highly appreciated real estate and take advantage of other markets with strong upside potential

  • Reduce or eliminate your property management duties

  • Consolidate or diversify your real estate portfolio

  • Simplify your estate planning while paying no tax

  • Maintain or increase your monthly net cash flow income

How does it work? The basic steps are:

  1. Determine the current market value of your property
  2. List and market your property for sale

  3. Facilitate the sale through a qualified intermediary

  4. Assure proper contract and escrow language

  5. Meet the 45 day deadline to identify the replacement property

  6. Transfer sale proceeds to the qualified intermediary

  7. Open the acquisition property escrow

  8. Complete the exchange within 180 days of close of escrow of your relinquished property

The end result is relief from your real estate management burden while you enjoy more free time as well as the income and capital appreciation from your investment.


Call Pete Sabine at 925.407.0606 for a consultation or visit


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