hey gang how you doing it's anthony carr
here with re max west end in northern
virginia we're talking about
avoiding taxes when you're selling your
rental home i know that some folks may
not have investment property yet but
eventually you might in northern
virginia about 13 of all the houses in
this area are actually
absentee owner property so the the
owners have moved along and they now
have a rental property so we're going to
talk about selling your rental property
rolling those funds over to a new
property and how to do that and avoid
taxes in the process so why this video
well what i found out is i was going and
doing some research and surveying
the investment properties in the area
over the years
most northern virginia investors owned
one rental property that is it these are
not properties that are held on by some
big corporation that owns hundreds and
hundreds of real estate properties
most of the single family and townhouse
properties in northern virginia are
owned by one investor and the investor
only owns one property so i thought you
know i bet you there's a lot of that
probably aren't really aware of the 1031
exchange or the or the nuts and bolts
about how it works so hopefully this
gives you some information on what you
can do to to avoid some taxes in the
future first of all the 1031 exchange
it's named after a a
code of the irs 1031 exchange where what
you're doing is you are exchanging one
rental property for another and what
you're doing is you're avoiding taxes
but really you're delaying the capital
gains taxes on the sale
of your rental home now
about a week or so ago i did a video on
taxes on capital gains and how to reduce
that as a
private homeowner
if you're a home owner that is an
investor you do not get the exemption
that the private homeowner gets when
they sell their property so you start
owing taxes right up front that's what
we're going to talk about so warning
number one
when you sell your property the seller
cannot receive the money from the sale
right at the start you must get an
intermediary to take over those funds
and to hold on to them in escrow until
you're ready to close on your second
property it's called i'm relinquishing a
property that's the home that you're
selling and then i am
getting a replacement property that's
the home that you're buying the
intermediary hangs on to the money from
the proceeds of the sale that property
to then send it to you
when it's time to to close on your next
property
so on this point
i want to give you a recommendation a
group called realty exchange corporation
they're right here in northern virginia
their second generation organization i
don't get any fee and any money from
them for promoting them it's just this
is the group that i have used with my
exchanges and they do a really good job
they've been doing it for a long time
the website is www.1031.us
so if you want to take an even deeper
dive on this thing about exchanges go to
their website they do a lot of educating
on that as well
warning number two don't drag your feet
when you are in the midst of selling and
replacing you do not have a lot of time
to
uh get that transaction done you can't
sell it this year
and buy it in you know next year
unless next year's within these the the
confines of the dates i have here right
now the first is you have 45 days to
find a new house
and after you found the new house
the whole process of finding the new
house and closing cannot take longer
than 180 days
from the time that you have sold
the uh relinquished property it all has
to be within six months so you got 45
days to find the house
and then you have the remainder time of
that to close so the total is 180 days
so if you find it within 30 days
then you have 150 more days to to close
so just make sure that you understand
that you find the property but you're
not hanging on to the money you do have
an addendum in that contract in our area
that it lets everyone know hey this is a
1031 exchange so there's going to be
money coming from a third party called
the intermediary
the exchange
means that you're going from a rental
property to a like-kind investment you
may not have a rental property you may
have something else that's a little bit
different what it means is that
it's real estate it's not house for
house okay you could have a residential
property that you're purchasing
you could have a commercial a warehouse
office property what you see here on the
screen it just means that it's a real
estate investment that you're exchanging
and it can be anywhere in the united
states it doesn't have to be in the
local area or in the state so those are
some of the benefits there that you have
there warning number three
the sales price of the property that
you're picking up after selling it has
to be the same price or higher so you
can't sell a house for 750 and go buy
one for 500 and walk away with 250 grand
in your pocket you have to buy if you
sell for 750 you've got to buy for 750.
the good thing about that though is that
it doesn't have to be one property you
could
buy more than one property that can be
purchased with that so you sell for 750
and you get three for 250 or you get one
for 400 one for 300 it just has to be
the same value
once that replacement um happens there's
an example here you relinquish a
property of 500 then the replacement
property is 2 at 250 or any combination
that amounts to 500 000
or more so that's a little bit of
information on that part when you're
looking to exchange be smart
talk with a real estate professional
also you want to talk with a tax
accountant you want to make sure that
you're taking care of business when it
comes to this because the penalty can be
quite severe i hope this was helpful to
you so it's going to help those who are
looking to hang on to real estate as an
investment and go from one real estate
investment to another and not try to to
cash out
thanks so much if you like my channel
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from it thanks so much and have a great
day