Are you wondering if structuring the sale and purchase of investment property, as a 1031 exchange is the right thing to do to improve your bottom line? You are not alone, there are quite a few people who are still to fully comprehend the nitty-gritties of 1031 exchanges. Transunionexchange.com reports:
Let’s assume that a taxpayer acquired a 10-unit apartment complex a number of years ago for $500,000. The current fair market value is $1,000,000 and the annual net cash flow after expenses and debt service is $25,000. The taxpayer could significantly increase his or her cash-on-cash rate of return by selling this apartment complex and reinvesting in a more profitable replacement property with no income tax consequences by completing a 1031 tax-deferred exchange.