How Can I Use a 1031 Exchange to Stop Managing Property?
If you want to cease managing a property and withdraw from the business side of the real estate market, there are several potential solutions using a 1031 exchange.
First, you can relinquish the property and swap for a new property with a different designation.
Second, you could pay capital gains taxes on the current property, including depreciation recapture taxes. This method is more expensive given the extra taxes that must be paid.
Third, you could make the property your primary residence. This process is time consuming. To get designation as your primary residence, you must own the property for five years and live in it for two.
If you still want to be involved in the property market but just want to end your involvement with a particular real estate portfolio, you should consider the first solution and change the designation of the property. If you are not interested in staying involved with the property market at all, you could simply sell the property and pay the required taxes despite the expense.
- What Is a 1031 Exchange?
- How Do I Complete a 1031 Exchange Application?
- How Do I Choose a Qualified Intermediary for a 1031 Exchange?
- What Type of Property Can I Swap in a 1031 Exchange?
- What Are Some Advantages Provided by a 1031 Exchange?
- What Is the Timeline for a 1031 Exchange Application?
- How Can I Take Advantage of a 1031 Exchange?
- How Long Do I Have to Complete a 1031 Exchange?
- What Is "Like-Kind" Property in a 1031 Exchange?
- What Is the "Boot" in a 1031 exchange?
- How Do I Fully Defer the Tax on the Sale of My Property through a 1031 Exchange?
- What Is a Delayed 1031 Exchange?
- What Is a Reverse 1031 Exchange?
- Do I Need an Intermediary for a 1031 Exchange?