1031 Exchanges are used to sell your current property and defer the capital gains with a re-investment in a similar property. Meaning, if you own a multi-family property, you may be able to sell the property and invest the equity into a different apartment building or other investment property, all while deferring taxes on the original sale.
By deferring your capital gains tax, your returns can be magnified by 20% (typical long-term capital gains rate) or more depending on your situation. If you have a $500,000 gain on an apartment building that has been held for 10 years, that’s $100,000 of tax (at a minimum) deferred and fully re-investable, providing more income and equity in future growth.
We have assisted many clients looking to sell apartment buildings and re-deploy the equity into larger apartment buildings. This is a good strategy for apartment building owners looking to grow while also not creating a tax liability. We also have assisted apartment building owners in selling their apartment buildings and 1031 exchanging into single tenant NNN retail properties. This allows owners to go from an investment that requires management (apartments) into a truly passive real estate investment all while avoiding capital gains. Below is a list of the successful 1031 transactions we have completed taking clients from apartments and into single tenant retail.