The New 1031 Exchange Alternative

This strategy is aimed at an investor needing passive, partially tax sheltered income without day-to-day management hassles. Further, it is often the goal of the exchanger to be able to transfer real estate wealth to surviving loved ones' upon death capital gains tax free. This tax vanishes at the death of the owner and the investment passes on to heirs on a stepped-up basis. Ask yourself, "Would I Like my life to be less complicated? Would I Like to avoid taxation on my capital gain? Am I tired of managing real estate?

The 1031 tax-deferred exchange is a crucial building block in the real estate investment strategy. Section 1031 of the IRS Tax Code allows you to sell your current investment property and within certain time constraints and following the required formula, purchase a new replacement property while deferring all capital gains taxes. Normally, one would exchange or trade-up to a property equal or greater in size and debt. This process saves money by not only escaping all the capital gains taxes; it also avoids state taxes and the recaptured tax on depreciation of the property being sold. Those savings are put to work as equity in the new investment property. What if you could roll those investment dollars into major real estate and actually own buildings valued at millions of dollars plus?

There are 1031 Exchange Alternatives that can help investors step up to Wall Street real estate opportunities. What does this mean to you the average investor? Foremost, it means you are finally going to get an opportunity to move into the kind of investment you could only dream of before. Nationally accredited tenants with triple-net leases finally let you in the door. This is done with a "Tenant-In-Common" (TIC) purchase. Instead of owning all of a property, now you can own perhaps 10% of a larger, newer and better-performing property by becoming a TIC; it is not a partnership, trust or LLC; it is direct ownership, between two or more investors. It is a fractionalized interest, in which you secure your own deed, and qualifies you for the 1031 exchange.

This is the cutting edge in real estate today - an exit strategy that truly allows the small investor to step up to the big leagues. The TIC alternative can help you solve many problems commonly associated with the standard 1031 tax-deferred exchange. With the standard 1031 exchange, it's difficult to find that perfect match to satisfy your "like kind exchange". A TIC will not only match your relinquished property's dollar amount, but will provide you with prearranged financing and management staff ready to take over your day-to-day responsibilities.

First-rate properties are often secured by nationally known, credit rated tenants that are able to withstand recessionary periods. Typically these properties are valued between $10 million and $30 million and are located throughout the country; yet you can purchase an undivided interest for as little as $100,000. You can choose from an assortment of properties ranging from RETAIL, CLASS A OFFICE, MULTI-FAMILY or INDUSTRIAL classifications. This allows an investor to gain economies of scale with fewer dollars.

If you are delaying your exchange because you fear there is a shortage of good replacement property, think again. With nearly 30 million dollars worth of TIC properties available, every month, the qualified investor is spared the grief of trying to locate the ever elusive replacement property within very restrictive time constraints. In a 1031 exchange, you can identify three replacement properties, without regard to their value. By naming one or two of the three as TICs, the savvy investor protects himself with a safety net should the purchase of another replacement property fall through.

"American has always had two tax systems; one for the informed and one for the uniformed. Both systems are legal" Former Justice Learned Hand

- Article written by Ty E. Jobin

For more information call 1-800-466-2003 or visit www.1031ea.com

Ty Jobin is the founder of 1031 Exchange Alternatives. 1031 Exchange Alternatives has has helped investors complete 1031 exchanges for nearly 9 years utilizing Tenant-In-Common investments. Visit http://www.1031ea.com for more information or call 1-800-466-2003.