Why you should consider having a 1031 commercial property exchange

In case you do not already know, a 1031 exchange is the name given to a strategy that allows you, as commercial property owner to take great tax advantages. So if you have a property, and you have to prepare to pay the taxes in the near future, you have the possibility to contact a 1031 exchange company and ask them advice on how you can avoid doing this, this year. This is a strategy which allows you to relinquish or sell some of your properties, and use the funds to buy a replacement one, but you have to meet certain regulations for doing this. And in case you are not decided if you should try this option or not, you should take a look at the following reasons why it is advisable to employ a 1031 exchange and defer the taxes.

You can benefit from deferral of taxes

When using this strategy you have the possibility to sell the property investment you owe, reinvest in a new one and benefit from capital gain taxes and deferring of ordinary income. It is advisable to use this strategy, because when you would take a look at the taxes you would have to pay in other case, you would notice that they are quite high, and you would lose a lot of money if you choose to not use this option.

You would have an increased cash flow

As you already might have thought, if you do not pay the deferring taxes you would have greater funds, you can use to invest for other things. Because you would have access to a larger sum of money, you would be able to purchase a better second property. When you sum up, you would notice that by using this strategy, you have a higher investment benefit, than if you chose to sell the original property you have, pay the taxes required by this action and purchase a new property.

You benefit from diversification

This exchange offers you great flexibility, because you have the possibility to exchange the property you have now with other ones from the market, and acquire any other property you want in the United States. In addition, by opting for this solution you can consolidate many properties into one that you want. You have the possibility to exchange your property with one of a different type, or even with multiple commercial space. For example, you can exchange a retail strip center with a duplex, and they do not even have to be located in the same region. Moreover, what is amazing is that you can choose the type of property you want to manage in the future, because some of them might require intensive management, while others are simpler to maintain and manage.

If you have further questions when it comes to 1031 exchange it is advisable to collaborate with a specialized company, and let the professionals help you handle the process, because there have to be met some requirements for being able to benefit from all these advantages.