Increasing Cash-Flow, Deferring Taxes and Reducing Risk using a 1031 Exchange | PREI 048
Summary: Would you like to defer (or eliminate) your capital gains taxes? How about increasing the cash-flow of your real estate portfolio?<br> <br> The taxable gain in real estate is due to a combination of the appreciation in value and the amount of depreciation taken over the period of time that it was owned by the investor. The tax savings using a 1031 exchange can be enormous. And using a 1031 exchange can help you re-position your real estate holdings into more, and better income real estate to increase your cash-flow and lower your risk.<br> <br> This is a content-rich episode, so get ready to expand your knowledge.<br> <br> If you missed last week's episode, be sure to listen to The Difference Between Rich and Wealthy (and Which is Better).<br> <br> Enjoy the show!<br> <br> - - - - - - -<br> <br> Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.<br> <br> Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here's how.<br> <br> See all our available Turnkey Cash-flow Rental Properties.<br> <br> Please give us a RATING & REVIEW (Thank you!)<br> <br> SUBSCRIBE on iTunes | Stitcher | Podcast Feed <br> <br> <br> Increasing Cash-Flow, Deferring Taxes and Reducing Risk using a 1031 Exchange<br> Today’s show is pretty special. There’s a reason why real estate is one of the most tax favored assets in the entire country. There are a lot of great benefits to owning income producing real estate. We’ve talked about depreciation in past episodes, how you can amortize or depreciate the improvements of your property over 27 and a half years. You don’t need to spend a single penny to get that depreciation. It is absolutely incredible. <br> <br> <br> <br> At some point, that will run out. After 27 and a half years, that clock will run out. Now, you don’t have that ability. There is a way around it. There is a way too reset the clock. There’s also a way to take equity that you have in your existing properties and move that equity into other better, larger properties. That doesn’t necessarily mean that you're going from single family homes to fourplexes or apartments. What it does mean is that you can take the existing equity you have across one or more of your properties and leverage that into more property, better property that increases your cash flow.<br> <br> In the process of doing that, because there are sales involved, you can defer your capital gains taxes. In fact, done right, you can defer them forever, indefinitely or at least until you pass away. Then there are some nifty things that happened like a step-up in the basis of that property so those that you will or heir the property to can start the clock over for themselves without any tax impact. It’s really a powerful thing. That’s what you're going to learn about today. <br> <br> I have a really special guest who’s going to go into a lot of detail. I went through a lot of information before bringing him on the show. I structured my questions in a logical format where we can just start with the most basics and go through some complicated scenarios. First, I want to take one of my listener questions here, which I don’t think I've covered in the past, but it ties in somewhat nicely to what our topic is today. <br> <br> This person writes and says, “Hi, Marco and Michael, a quick question about depreciation on tax returns. I know you guys are not CPAs but I’m sure you must have done it so many times. If a property is older than 27 and a half years when I bought it and if I bought it rehabbed, can I still claim the depreciation on the building, not the land? Does the counter get reset somewhere during the process or is this something that is applicable to properties newer than 27 years old or just one string of life of the building? Thanks, guys.”<br> <br> I know what you're asking but you're asking the wrong question.
