Did you know you can use tax free dollars in your exchange account to pay for improvements or construction at the property you buy? You can, and all the money you spend to fix the property is tax free!
What is an Improvement Exchange?
This is a powerful tool because the value of the improvements is counted toward your exchange. So for example, if you sell a $100,000 property and buy an $80,000 property in your exchange, you can spend $20,000 on improvements, for a total acquisition cost of $100,000 to complete the exchange!
These are simplified explanations and there are potential pitfalls to look out for. Please contact our Improvement Exchange Department by phone, 866-944-1031 or ask us or schedule a consultation for a comprehensive recommendation for your particular situation.
Each dollar spent is a full dollar as it is tax free! If those dollars were returned to you at the end of the exchange they would be taxable and so more like 70 cents on the dollar after taxes. So think of not only buying but improving!
Fees for improvement exchanges are an additional $4000 *, so unless your improvements are more than $30,000 where taxes would be $10,000, paying the additional fee does not make sense. You can also improve property you CURRENTLY OWN. But please call or or schedule a consultation to ask about the details.
Corporate Headquarters: 5355 Avenida Encinas, Suite 203 • Carlsbad, CA 92008 • Direct: 1.866.944.1031
1031 Exchange Advantage™ is a trade name of 1031 EA, LLC and is not a licensed broker. 1031 EA, LLC does not provide, brokerage, legal or accounting services and is simply a Qualified Intermediary under the IRS code. It therefore is not providing any services other than accommodation services and clients and prospects are advised to confirm all tax, legal, accounting and real estate investment decisions with their professionals such as their accountant or attorney.