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1031 Real Estate Exchange: when is it beneficial?
May 20th, 2009 by Dirtguy | Filed under Renting & Real Estate.
SG asked:
I was recently confronted in regard to my FL condo (I owe $213) to exchange w/ a Myrtle Beach condo ($150). I am trying to sell/get rid of it to avoid future foreclosure. I have a permanent tenant lined up in SC, whereas I can’t even rent out on mine right now in FL–so I’m currently taking a big loss regardless.
I was recently confronted in regard to my FL condo (I owe $213) to exchange w/ a Myrtle Beach condo ($150). I am trying to sell/get rid of it to avoid future foreclosure. I have a permanent tenant lined up in SC, whereas I can’t even rent out on mine right now in FL–so I’m currently taking a big loss regardless.
How does a 1031 work, specifically when I owe more? Will I lose tremendously or does it wash even in the exchange process? I guess I’m confused as to how the titles & money owed are exchanged.
I’m trying to make it out of this unfortunate investment without drowning in the current slump! Would this exchange be beneficial to me?
investing real estate
Tags: 1031 Exchange, Foreclosure, Guess, Investing, Money, Myrtle Beach Condo, Real Estate Exchange, Regard, Slump
You need to exchange for a property with the same or higher debt. You can’t trade down, only even or up.
Title and money are handled by the exchange company you select.
It is a great way to avoid capital gains taxes when buying another income property but not as a way to get out of foreclosure and move to a smaller property.
You need to find a title company that has EXTENSIVE experience with 1031 exhanges…. they can be very beneficial – but you have to do everything EXACTLY right or it will not work.
Each exchange is VERY specific and the title company can go over all teh details and tell you IF it will work and HOW it will work.
Good Luck!