Becoming familiar with the benefits of a §1031 exchange can boost your commissions and help guarantee long-lasting client relationships.
A §1031 tax-deferred exchange – also referred to as a Starker exchange – is one of the few remaining tax advantages available to your clients. The benefits of a §1031 exchange are many, and they all result in protecting and leveraging client equity.
Exchange properties come in a variety of shapes and sizes. They range anywhere from a simultaneous exchange of two properties to a complex, multi-leg, multi-property transaction that involves a delayed, reverse or construction exchange.
Starker Services, Inc., is the nation’s largest, most experienced, independently owned Qualified Intermediary. Formed following the landmark Starker tax court decision, our sole function is to provide a staff of highly-trained professionals available to discuss exchange strategies and prepare accurate documentation supporting all forms of tax-deferred exchanges. Every major real estate firm has used Starker to counsel their clients on the strategies, available upon the sale of real or personal property.
We also partner with real estate professionals by providing joint marketing opportunities, continuing education and free office seminars. An informed realtor is the client’s most valuable resource. Our two decades of experience with tens of thousands of §1031 exchanges make us the perfect choice for your exchange needs. Order our “Tax-Deferred Exchange” booklet, or call us today at (800) 332-1031 for more information. We look forward to working with you.
Simply put, a §1031 exchange allows your clients to sell their investment property, while at the same time deferring capital gains taxes by reinvesting 100% of their equity into another investment property of equal or greater value.
The true power of exchanging is the ability to meet investment objectives without losing equity to taxation. Known as leveraging, this method of acquiring real estate helps your clients purchase property many times the value of their initial investment.
At Starker Services, we maintain that Realtors play a key role when they point out potential benefits of tax-deferred exchanges to their clients. Sellers can employ the services of an Exchange Intermediary at any point prior to the property closing - after that it is too late.
The main requirement is that your client's property or business asset has been held by the client for productive use in a trade or business, or for investment purposes, and be exchanged for like-kind replacement property.
Your clients should never have to pay capital gains taxes on the sale of property if they plan to reinvest.
Dollars saved in taxes allow the investor to purchase 4-5 times as much real estate.
Your clients should be aware of the time requirements of 45 days to identify the replacement property and 180 days to complete the entire exchange.
Exchanges can range anywhere from a simultaneous exchange of two properties to complex, multi-party transactions involving construction and/or reverse exchanges. Consult a Qualified Intermediary like Starker Services, Inc. to find out what type of exchange is best for your client.
Clients are able to maximize their capital by deferring the taxes that would otherwise be incurred on an outright sale of their property by utilizing an exchange. They can use the entire amount of the equity from the exchange to acquire substantially more replacement property.
Properly structured and administered, an exchange becomes an invaluable tax-saving tool and an integral part of the investor’s strategy.
Clients considering the sale of investment or income property should first consult their financial or tax advisor to determine if a tax-deferred exchange will benefit their long-term investment goals and retirement plans. Ultimately, your client must decide whether to take advantage of an IRC Section 1031 exchange or write a check to the IRS.
This material is provided for informational purposes only and is not to be construed as tax advice. The reader is strongly advised to speak with a tax consultant before attempting to employ any of the concepts stated herein.