Can I 1031 Exchange My Home? | 1031 Questions, Answered
Folks ask me all the time, "Can I 1031 exchange my home?" The answer is no. But there's some good news: you don't need to.
• Selling your home falls under a different part of the tax code, Section 121, not Section 1031.
• Section 121 says that if you have capital gain on a home you've lived in for two of the last five years, you can keep a portion of that gain tax-free.
• If you're single, you can keep up to $250,000 of capital gain tax-free. If you're married, up to $500,000.
• Section 1031 is limited to property used for trade, business or investment, not your personal residence.
• If a property is both your homestead and used for something else, call us. In some cases you can use your Section 121 exclusion and do a 1031 exchange with the rest of the funds.
Chapters
0:00 Intro
0:05 Can I 1031 exchange my home?
0:16 Section 121 for your home
0:42 $250,000 single, $500,000 married
0:54 What Section 1031 covers
1:16 When a home is also an investment
1031 Questions, Answered is a WealthBuilder 1031 series with plain-English answers to the questions investors ask us most. Subscribe so you don't miss the next one.
Have a question about your sale? Start at https://wealthbuilder1031.com or call 888-508-1901.
This video is for general educational purposes only and is not tax, legal or investment advice. Tax rates vary by situation. Talk with your own advisors about your situation.
#1031Exchange #1031QuestionsAnswered #Section121
Does a Small Check Mean a Small Tax Bill? | 1031 Questions, Answered
"I just sold my property, and I only got a small check at closing, so I should have a really small tax bill." Well, that's not necessarily true.
People often get confused about this because what we get at closing is based on one set of numbers, and what we owe in capital gains tax is based on another.
• Your check at closing is the sales price, minus closing costs, minus your loan payoff.
• Your capital gain starts with what you originally paid, adds improvements and subtracts the depreciation you've taken. That's your adjusted tax basis. Your gain is the sales price, minus sales expenses, minus that adjusted basis.
• The loan payoff isn't part of the capital gain math. That's why an investor who has done cash-out refis can get a very small check and still owe Uncle Sam a much bigger one than planned.
• Before you sell, don't assume. Check your numbers with your accountant, or try the free capital gain calculator at wealthbuilder1031.com for a quick look at your gain and the tax at a 15% rate.
Check your numbers before closing.
Chapters
0:00 Intro
0:05 "I only got a small check"
0:29 What you get at closing
0:40 How capital gain is calculated
1:19 Why the loan payoff matters
1:43 Check your numbers before you sell
2:00 Our free capital gain calculator
1031 Questions, Answered is a WealthBuilder 1031 series with plain-English answers to the questions investors ask us most. Subscribe so you don't miss the next one.
Have a question about your sale? Start at https://wealthbuilder1031.com or call 888-508-1901.
This video is for general educational purposes only and is not tax, legal or investment advice. Tax rates vary by situation. Talk with your own advisors about your situation.
#1031Exchange #1031QuestionsAnswered #CapitalGainsTax
What Does a 1031 Exchange Accomplish? | 1031 Questions, Answered
People often ask me: what is the point of doing a 1031 exchange? What does it accomplish?
I like to answer with a story about two investors, John and Jane. Each has $100,000 of tax basis in a property and sells it for $150,000, so each has a $50,000 capital gain.
• John sells the usual way. At the closing table there's an invisible third party, Uncle Sam, and John writes him a $7,500 check (at a 15% tax rate).
• Jane uses Section 1031. She follows the IRS rules and puts all of the sale money into replacement property, so she defers the tax.
• Jane keeps that $7,500 as equity in her new property, where it can keep appreciating and producing cash flow. John has lost that opportunity for good.
• Now add a zero: a $500,000 gain means a $75,000 check. Add another zero: a $5 million gain means a $750,000 check. That's real money.
That's the value of a 1031 exchange: keeping your equity working for you so you can grow and build wealth over time.
Chapters
0:00 Intro
0:05 What does a 1031 exchange accomplish?
0:19 John sells and makes a $50,000 gain
0:38 Uncle Sam at the closing table
1:20 Jane and Section 1031
2:22 What Jane gets that John doesn't
3:16 "Is it really a big deal?"
3:37 Add a zero, then another
4:11 Why we do 1031 exchanges
1031 Questions, Answered is a WealthBuilder 1031 series with plain-English answers to the questions investors ask us most. Subscribe so you don't miss the next one.
Have a question about your sale? Start at https://wealthbuilder1031.com or call 888-508-1901.
This video is for general educational purposes only and is not tax, legal or investment advice. Tax rates vary by situation. Talk with your own advisors about your situation.
What Is a 1031 Exchange? | 1031 Questions, Answered
With a company named WealthBuilder 1031, you can guess the question I get asked the most: what is a 1031 exchange?
In about two minutes, I walk through it in plain English. A 1031 exchange lets you sell investment real estate, buy other qualifying property, and defer the capital gains tax. Defer means you don't pay it now; you pay it sometime later.
Here's how it works:
• Set up the exchange before your sale closes
• A qualified intermediary holds your sale money, so you never touch it
• Identify your replacement property within 45 days
• Buy your replacement property within 180 days
The payoff: you keep the full value of your property working for you, instead of taking a 15% or 25% haircut and sending that check to Uncle Sam.
Chapters
0:00 Intro
0:05 The question I get asked the most
0:16 What a 1031 exchange is
0:41 How a 1031 exchange works
1:01 The 45-day and 180-day deadlines
1:49 Why it matters: keep the full value working
2:08 The recap
1031 Questions, Answered is a WealthBuilder 1031 series with plain-English answers to the questions investors ask us most. Subscribe so you don't miss the next one.
Have a question about your sale? Start at https://wealthbuilder1031.com or call 888-508-1901.
This video is for general educational purposes only and is not tax, legal or investment advice. Tax rates vary by situation. Talk with your own advisors about your situation.
