1031 Exchange Explained: A Real Estate Strategy For Investors

[@TobyMathis]

Would you like to learn more about this topic and talk to someone? Schedule a free consultation here: aba.link/aa50fa

[@CraigJudah]

I'm getting ready to sell my house in Atlanta. I will definitely use the 1031 exchange thanks to your tremendous information. This is the best breakdown of the 1031 exchange that I have heard. I also love your motto, buy, borrow die, 1031 exchange, and if you're paying taxes in real estate you don't own enough. This was an excellent class, thank you sir.

[@TobyMathis]

Awesome to hear you found the breakdown helpful! Keep rocking the real estate game with that 1031 strategy!

[@jeremymitzuk4055]

I know a video is very informative when I have to back it up several times to understand what is being said. Well done!

[@mg.323]

Me too lol.

[@stevejanejamesjassteph5903]

Fascinating, thank you for taking the time to share your expertise

[@mikemurphy5716]

Just stumbled across your channel. Really like the format for content. Simple and to the point.

[@TobyMathis]

Glad you enjoy it!

[@TobyMathis]

Learn how to use the IRS tax code to your advantage and keep more of what you earn during this free webinar. aba.link/oyf

[@KaiPonte]

Thank you! I had been looking at a 1031 for years. As my father-in-law died and left a property worth $1.4M that my in-laws bought in 1973 for $45,000. I think this can be transferred and sold as the stepped up basis of the property is $1.4M - the value when he died. (My mother in law died 19 years ago.)

[@woliver79]

You're correct you will have a step up, so no need for the 1031. 1031 would be benificial if you are trying to defer the taxes on real estate that you would realize a gain or loss on the sale of the first property and turning around to use those proceeds to buy a second property. When you have a step up and your basis which would be the FMV and what you sold it for are the same you will not show a gain so no need to 1031 if you just want to pocket the money.

[@roylappin4491]

How do I find a “QI”

[@davidmoolekampcpa3370]

Great video, but no one talks about after you do the 1031 and you sell - what about the deferred gain? Not everyone is going to exchange for the rest of their lives. Can you cover that in a video one day? thanks for all of your video I watch them weekly and share with other CPAs

[@TobyMathis]

Great suggestion!

[@notmeee7302]

Question: can a sibling buy property from another sibling and put into a 1031 exchange? I am thinking of a client that wanted to do this when commercial was allowed not just residential (immediate family members were excluded as the seller or buyer).

[@teepomonkey]

​@@notmeee7302 O2cbxlv

[@The1SimLash]

If you defer, defer, defer then sell you're liable for all of that deferred gain. You might need to do a lazy 1031 in that case but I think it'd make more sense to refi.

[@johnnytsan4883]

Can we buy with a loan on the replacement property? Or all the proceeds have to go back into the replacement purchase? Thank you Sir.

[@NicholasMendez-y6y]

example can I buy 10 properties as long as it does not exceed 200% of the sale??

[@mprenn1547]

Thanks for the video. Question: we bought a home in 2016 and kept our old home, but haven't rented it out during that time (a long story). Our new home has doubled in value from 500k to over 1M. so we could sell and use the 121 exclusion on the new home, no problem. My question is regarding the first home: as it WAS a primary residence but no longer qualifies, will it be considered investment property if we rent it out, then be able to do a 1031 exchange? We are looking to leave the state soon and would consider divesting all holdings. We also own some land that has been rented since 2006 and is worth about $500k.

[@belikenick2]

Love your videos!

[@TobyMathis]

Glad you like them!

[@ZhuGillian]

I found this video super helpful. Thank you for sharing!

[@roxannacheng4309]

How does the California state treat the property tax for the replacement?

[@TobyMathis]

That's a good question. The treatment of property tax for replacement properties in California can vary, and it's essential to navigate these intricacies effectively. To provide you with accurate information tailored to your situation, I recommend scheduling a free strategy session. You can start by visiting aba.link/aa50fa

[@samgoodwin6221]

great video! quick question, if i'm selling a property in state A and buying in state B, do i get my QI from state A or B?

[@TobyMathis]

Great question, in order to assist you further, I highly recommend you request a free 45-minute consultation to discuss our proven asset protection and tax strategies and how they apply to your unique situation. aba.link/aa50fa

[@mannykeys7420]

All gems 💎 my guy! I feel like I owe you an hour consultation. Keep up the great work.

[@irgski]

What if you and another property owner simply want to exchange properties? Do you still need to actually sell the property?

[@lorettathai9713]

thank you so much for your video

[@lillithjones993]

Can I do a 1031 exchange on a property that I bought that I have partially remodeled in order to rent it out? I would rather exchange it for a rent house in a different neighborhood.

[@TobyMathis]

As long as you have been using the existing property for an investment property, you should qualify for a 1031 exchange.

[@GaryGleave]

Hi Toby. I have a primary CA home going from 500K to 2.4M, so I'm good to use the 121 for 500K saving. But I need to convert the remainder into investment for a 1031. I'm hearing the IRS 1031 does not have a minimum time to treat my home as an investment, but I'm hearing "hold it for at least two years" or "one year minimum". You just suggested 6 months. The shorter the better for me. What is sufficient?

[@duprosezzllc223]

No wonder you have 340k subs. Your content is 🔥

[@Dipper964]

So I have an Airbnb that’s still under my name, will it still work or do I have to transfer it to an llc? Also, if I buy a duplex, can I live in one?

[@CC-fh9hj]

Where do I find a QI ?

[@r.c.336]

Looking for a QI...Not all can be trusted...Do you know someone in Long Beach area...

[@salradi1041]

Does a flip property qualify as investment property or does it have to be rental? What about airbnb it for 3 months?

[@ChristaRoach]

Any property that is not your primary residence is considered an investment property.

[@BlindgeniusYT]

Is it better to buy the replacement property first and then sell your existing property within 180 days in today's market? Doing it the other way around limits you to 45 days to find a replacement property, which can be risky given the competition. Additionally, if a property you identified within 45 days gets sold to someone else, can you identify a new property on day 46?

[@TobyMathis]

Thank you so much for your question! We highly recommend you join us at our next Free Tax & Asset Protection Workshop Livestream. Our attorneys and specialists will answer all your questions at no additional cost. Save Your Seat: aba.link/taptoby

[@facts1774]

180 days or till due date of tax return, make sure to file for extension

[@guahangarage]

Oh California! How I love and hate you at the same time😂. Great video got me laughing and learning at the same time! Thank you for the education! Looking forward to doing business with you sometime within a year from now. Just subscribed! Much respect to you! 🤙🏽

[@roxannacheng4309]

What kind of property tax will the new property responsible for? How does that work?

[@TobyMathis]

Great question! The specifics of property taxes can vary based on location and property type. To provide you with accurate information tailored to your situation, I recommend scheduling a free strategy session. Visit: aba.link/aa50fa

[@1goblingreen404]

Great video. Thanks for creating. Does the tax obligation amount change with the tax laws & percentages every year, or does the amount owed stay static over time? A 50k debt won't sting as much in twenty years as it does today, even if a 1031 deferral comes due at that time.

[@tomporter2328]

Hi. Enjoying your videos, I am trying now to do a 1031, but finding that it's impossible to do an improvement exchange if I'm getting a mortgage on the properties. Unless I go with a non-recourse loan, at a very high differential rate. Is there a strategy to reassure the lender, on for instance, a DSCR loan, to be able to make the renovations within the 180 day window?

[@TobyMathis]

Great question, to assist you further, I highly recommend you request a free 45-minute consultation to discuss this with my team so we can provide you with an answer that is unique to your situation. aba.link/aa50fa

[@rohanebanks8837]

My Situation: I want to sell my rental in Austin (had it for over 5 years - it was never my primary residence) I would like to buy my primary residence in Orlando ... BUT.. under the Like-Kind rules, I have to acquire the Orlando property and rent it out. I have to hold it as a rental for how long before I can move in????

[@Osay1216]

Here is my question, can I 1031 exchange 4 investment properties for one larger property such as a apartment building.

[@TobyMathis]

I would set up a free strategy session with my team to get the specific answer that is unique for your situation. Visit: aba.link/aa50fa

[@pict4119]

Where can you find QI?

[@TobyMathis]

There are a ton of good ones - just look up 1031 intermediaries online and interview a few. Your realtor will likely have a bunch they have worked with as well.

[@woliver79]

can you 1031 into an existing property to upgrade the property?

[@TobyMathis]

Thank you so much for your question! We highly recommend you join us at our next Free Tax & Asset Protection Workshop Livestream. Our attorneys and specialists will answer all your questions at no additional cost. Save Your Seat: aba.link/taptoby

[@kayla3682]

Great explanation of 1031 exchanges.

[@samuel041874]

hello toby, my understanding of the 1031 exchange is that i can not 1031 from SF to MF. Is this correct?

[@mrrondouglas]

What if you end up buying a property that was not one of the properties you identified in the 45 days? Maybe the three you identified were sold to someone else. Can you still do the 1031 exchange with a property that you didn't identify?

[@chrischamberlain7628]

That’s a good question, and one I’d like to know also. It’s a shame you didn’t get an answer.

[@mrrondouglas]

@@chrischamberlain7628 the answer from my attorney was no. It has to be one of the properties you identified.

[@thardyryll]

Buy it, see it appreciate, sell it, pay the tax, and spend the money. At least you see most of the profit. With a 1031 carried to the usual no-taxes-ever extreme, somebody else gets all of it. (Spoken from the situation of a child-free person.)

[@cathytrull2123]

Could you do it with a retirement account property? Like I have an condo inside my solo 401k

[@markdewey1587]

Why would you? If it’s in a 401 then it’s tax deferred or free if it’s Roth.

[@TobyMathis]

Yes, you generally can utilize a 1031 exchange with real estate held in retirement accounts. With that said, 1031 exchanges simply defer taxes. 401ks and traditional IRAs already defer taxes on the assets they hold, so a 1031 may not have much of a benefit depending on the circumstances. If the real estate was acquired by the retirement plan with debt financing, then there may be more of an incentive for a 1031 exchange due to the taxation of debt-financed income in retirement accounts.

[@HEOEvgeny]

Excellent ideas. Thank you for teaching us the fools

[@TobyMathis]

Glad you like them!

[@worldchanges10]

Thanks

[@mlwelter]

Selling for 800k, have a 300k loan to pay off. Can I invest 200k of the remainder in a new rental and then anticipate paying taxes on the 300k we stash in the bank?

[@TobyMathis]

Great question, I'd recommend setting up a consultation for a specific answer. Visit: aba.link/aa50fa

[@davidmcghee7696]

I have 700k equity in a house I lived in for 10 yrs now. I want to use this to build a house in the mountains. I have to use the equity proceeds because I cant get a loan to build the new home. New home value will be around 300k. How do I do this without paying capital gains taxes. Married filing jointly.

[@ethelperry4529]

Thanks! : )

[@rrichard5515]

Your videos are very informative but too long. Try to trim the length but keep up the great work.

[@TobyMathis]

Hey Randy! Thank you for your feedback.

[@NicholasMendez-y6y]

Can I buy more than 3 investment properties ?

[@TobyMathis]

The real issue is when you identify replacement properties. You can buy more than 3, but you must identify replacement properties within 45 days. If you want to identify more than 3, the two rules are the 200 percent rule and the 95 percent rule (you only need to meet one of them): Under the 200 percent rule, investors have the flexibility to identify multiple replacement properties, with the caveat that the total value of these properties should not surpass 200 percent of the value of the sold property. For instance, if the property sold for $1 million, the total value of potential replacement properties identified should not exceed $2 million. The 95 percent rule gives investors the liberty to identify any number of replacement properties without a cap on their combined value. The critical condition here is that investors must then go on to purchase at least 95 percent of the aggregate value of the identified properties. So, if an investor marks properties amounting to $2 million, they are required to purchase properties worth at least $1.9 million, which is 95 percent of the total identified value. Hope this helps.

[@NicholasMendez-y6y]

Thanks for your help @@TobyMathis

[@scotthamill4772]

Toby, can I 1031 exchange my rental property through you to build 2 new homes on an undeveloped lot? I would live in one and subdivide and rent the other using California SB 9. I have not purchased the lot yet and would want to include in the exchange. The cost of the new homes would be more than the money received from my rental sale so would be adding additional funds.

[@TobyMathis]

Thank you so much for your question! We highly recommend you join us at our next Free Tax & Asset Protection Workshop Livestream. Our attorneys and specialists will answer all your questions at no additional cost. Save Your Seat: aba.link/taptoby

[@jeffg2535]

is there any way to shelter the capital gains on an investment property? i have investment property (that has been rented for last 3 years) where my basis is 300k and it's worth 1mm now. am trying to sell to build my retirement home.

[@eldonbirth5429]

What if you die can the state still come after the tax from your heirs

[@sz4179]

Not w. Current rule of inheritance at the Stepped up basis afaik...

[@roxannacheng4309]

Where is the best place to look for QI?

[@TobyMathis]

I would talk to your local realtors as they like drama-free QIs:-)

[@papajoe5331]

i thought raw land was not allowed

[@ginasomers1751]

Can my LLC purchase real property , from. Me, that I own as my primary residence?

[@TobyMathis]

While legally it can, there are only a few limited circumstances where that is the right decision, one such being when you are transitioning the property from a personal residence to a rental or investment property. Otherwise, a land trust is a good option to maintain anonymity and the homestead exemption.

[@lavellnutrition]

That's sounds scary in today's market. Sounds good but if your renters refuse to pay and we end up in a lock down again, then what? .... I need something else as single person.

[@nguye1971]

Good point - or closing unexpectedly delayed for a replacement property while the clock is ticking

[@adambrent4076]

Who qualifies as a QI

[@raymondwong336]

Need to not go off on so many tangents and stick to the main topic

[@Native2Earth]

Buy borrow die. If you’re paying tax on real estate it’s because you don’t have enough AKA get your bread up 😂

[@llumiinati]

Dang, i dont like this method.

[@mikesterling7694]

There has to be a simple way to explain this crap. I'm going to check out Bigger Pockets 5 minute video about the same subject

[@MuzaffarSharapov-qr6kx]

It’s already simple. His explanation is straightforward and easy to understand.

[@scottdorvin3705]

Good grief can't understand any of this period he needs to learn how to communicate better

[@SoudaBell]

How do I find a QI?