Episode 055 - The Best Tax Benefit for Real Estate Investors

<p><span style="font-weight: 400;">This episode is part 2 of our talk with our guy in the financial industry, Michael Velasco. This week we’re diving deep into 1031 Exchanges, which if you’re not in the know yet, get out your notebook for this conversation. When you’re talking with your clients about investment properties, the 1031 Exchange is a super-tool to increase wealth and build your portfolio while deferring tax payments down the line. Let’s get into it.</span></p> <p><span style="font-weight: 400;"> </span></p> <p><span style="font-weight: 400;">“The IRS said, ‘We're going to give you the greatest benefit ever.’ Congress always gives motivation through tax deferment for people to do things. They're incentivizing us to invest in America through stocks and through long-term capital gains, which is much lower than short-term capital gains, as we know. And then, they give us this beautiful little thing called depreciation and a 1031 exchange.” - Michael</span></p> <p><span style="font-weight: 400;"> </span></p> <p><span style="font-weight: 400;">First, what is a 1031 Exchange? As Michael states, “Being able to exchange property for another one of equal or greater value and avoid tax consequences. That's at the heart of a 1031 exchange. That's what it is.” Basically, if you’re using the money you would gain from selling one property and using that money to buy another property of equal or greater value, you can defer the taxes that you would have incurred on that sale.</span></p> <p><span style="font-weight: 400;"> </span></p> <p><span style="font-weight: 400;">As with any kind of program like this, there are many other exemptions, caveats, and small details that are part of the program, so even this explanation is a bit simplistic. That’s why we have Michael on to help us navigate the harder to explain bits and get more knowledgeable as agents about this fantastic tax tool.</span></p> <p><span style="font-weight: 400;"> </span></p> <p><span style="font-weight: 400;">“As a real estate agent, you're the pro, so