Why Should One Consider Doing a 1031 Tax-Deferred Exchange?
You may have some non-income producing real estate investments, such as raw land. You could exchange this property for another asset that would not only give you cash flow, but also get you income tax deductions such as depreciation, which you did not have with your raw land. You may have been holding properties long after their appreciation has topped out. You can start rebuilding your equity by disposing of those investments and acquiring new ones. You may have management-intense rental properties and would prefer to transfer your equity to ease-of-ownership single tenant properties (coupon clippers) such as Walgreen Drug Stores, Wal-Mart, Post Offices, Circuit City, Office Depot, etc. When selling real estate, if you sell and reinvest, you will pay income taxes on the realized gain. However, if you call it an exchange, you will. This means that more money is available for acquiring your next investment. It can be regarded as a free loan from the government! With proper estate planni
