Real Estate Investment Options
Are you looking to sell real estate investment property? There are many reasons why investors choose to sell. Perhaps you are a landlord, tired of the physical labor it takes to maintain your property. Perhaps you are moving and want to purchase investment property closer to your new place of residence. You could also be looking to cash in on the appreciation of the property, or trade the property in for another type of real estate investment.
No matter what your reason is for wanting to sell an investment property, our team here at Diversified Investment Strategies wants you to know that we’re here to help. Unlike selling stocks, investment properties don’t disappear with a click of a button. If often takes weeks or months to finish a sale transaction, and there are taxes on the property that need to be dealt with.
Capital gains taxes on rental property are much steeper than personal property taxes. Also, if you claimed deprecation of a property in previous years, to avoid paying taxes, you will have an even heftier tax bill when you go to sell.
How can you avoid this hefty tax payment? Here at DIS, we specialize in helping real estate investors avoid paying federal taxes by using Internal Revenue Code Section 1031. This allows investors to avoid taxes on their gains by reinvesting in like-kind property.
When you sell your current property with a 1031 exchange, you will have 45 days to choose new property and six months to complete the transaction. Your gains will remain in an escrow account during that time. Our team at DIS can help you with all of this!
If you were hoping to rid yourself of landlord responsibilities, you still can! With a 1031 exchange, you may have options that allow you to invest with little to no responsibility on your shoulders. Options may include a Delaware Statutory Trust (DST), UP-REIT, Triple-Net (NNN) and more.
Incorporating is another option that lenders may have, as it is meant to lessen your personal liability. The corporation acts as a shield between you and the possibility of a tenant suing you. However, while it is quite easy to incorporate, it is much harder to get properties out of corporation. You may need to sell the corporation rather than the individual properties, which could be much more difficult. Also, it may not be as easy to access your property earnings when incorporated, so if you regularly rely on this income, this option may not be for you.
You may have options, and it is up to you to choose the option that makes most sense to you and your situation. Contact our team at Diversified Investment Strategies! We can help you choose the correct path, and we can help you through a 1031 exchange if that is the path you choose.
Contact DIS today!
The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee profits or guarantee protection against losses. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Diversified Investment Services is independent of CIS.
Bryan Hakola
Diversified Investment Strategies
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