Have the Best of Both Worlds With a 1031 TIC Exchange

Lease AgreementWhile lucrative, managing a rental property can be a tad too demanding for most folks, especially when you become older. Dealing with some troublesome clients can suck the joy right out of the process. On the flip side, the monies that roll in every month are good for your financial outlook.

If you are keen to enjoy the benefits but escape the hassle, then you’re the perfect candidate for a 1031 TIC exchange. Some firms such as 1031 Exchange Place can help you get started with this.

Surprisingly, you can have the best of both worlds with a little help from an unlikely source – the government.

Escape the taxman

Okay, escaping the taxman while looking towards the government for help might seem controversial but not this case. See, to encourage people to reinvest their capital gain in the real estate sector, the IRS lets you defer the tax on gains.

Under the section 1031, you get to keep all your capital gains but only if you reinvest the entire amount into a commercial property. While the process is a tad complex and requires you to retain expert helps, the benefits are truly worthwhile.

The lowdown of it is that you need to sell your current property and buy up to three other properties of equal or greater value.

Escape managing tenants

If your interest is to have a comfortable retirement without the responsibilities that come with property management, then you’re in luck. Instead of going for new properties, you only need to choose the tenants-in-common option.

Under this provision, you channel your sales proceeds into buying a portion of a larger property. For instance, if you raise a $1million from the sale, you can use the money to purchase a million’s worth of share in a multi-million shopping mall.

Under the tenants-in-common provision, you have no active management in the property, but you get a share of the profits each month.

If you’re looking to give up active management in the real estate sector without giving up the money, the government offers you a way out. Signing up for a 1031 TIC exchange lets you have the best of both worlds.