Things that every property investor needs to know

It is very important to keep up with the latest strategies when it comes to being a successful businessperson. Unfortunately, the most difficult part is that you have to pay so many huge taxes and respect the deadlines; otherwise, everything is in vain. This is the reason why you have to be informed about the 1031 exchange possibility. This is a relatively new strategy that offers you the possibility to defer some taxes that used to be a barrier for your business projects. The 1031 exchange properties list is so big, but you need to have in mind just a few essential aspects that will help you understand how it works. You must forget about paying numerous taxes because they are not required if you are ready to take the advantages of the “like kind exchange”. So many powerful property investors have become successful only after using this tax-deferment strategy.

Things that every property investor needs to know

Swap properties that are alike

You have the possibility to find another property that is similar with yours in the sense that it has to serve to the same type of purpose. With other words, the properties have to be used for investment purposes, not for your personal needs because this is forbidden. You have the possibility to purchase any property that has been used as a business building or maybe for trading purposes such as a retail building. There are infinite possibilities, but you have to read carefully the rules and make sure that everything you do is legal. For this, you might need an expert in this domain that will help you follow every step and make everything correctly. As you already noticed, the strategy is also called “like kind exchange” just because this is an essential rule and without meeting it, nothing would be valid.

Timelines pay a significant role

You should make everything you can in order to meet the timelines that are extremely important. You will need to identify at least 3 possible properties that you want to purchase within just 45 days. If you don’t do that, nothing will be considered because this is the first big step that every investor must perform. After doing that, another important timeline will appear because you have to close the deal in 180 days or 6 months.  This means that you have to make many decisions faster, but you will see that this effort will be rewarded.

You will need a qualified third party

As it was already mentioned, there are many rules but you don’t have to worry because if you will hire some experts that will help you, everything would be very easy. For example, you will need a third party that will actually be an intermediary between you and the person that owns the other property. This is required because the government wants to be sure that everything has been made with accuracy and there is no scam. The qualified intermediary will hold the sales and prevent the taxpayer from a sort of constructive receipt.