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Non-Tax Reasons to Exchange
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Volume #2004, Issue #10 |
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Generally, investors complete tax deferred
exchanges to defer the capital gains tax on
disposition of their investment properties.
However, there are many additional underlying
reasons an investor might want to exchange
one property for another. Below are some typical
non-tax motives to exchange:
- Exchange from fully depreciated
property to a higher value property that
can be depreciated
- Exchange from a property
that cannot be refinanced. For example,
moving from vacant land to improved property,
which can support a new refinance loan,
and will thereby give the client the ability
to obtain cash after the acquisition of
the replacement property.
- Exchange from a non-income
producing raw land to improved property
to create a positive cash flow from the
rental income
- Exchange from a property
with maximized or minimal cash flow to
a higher cash flow property
- Exchange from a stagnant
or slowly appreciating property to a property
in an area with faster appreciation
- Exchange for a property
or properties that may be easier to sell
in the coming years
- Exchange from several
smaller properties to one large property
to consolidate the benefits of ownership
and reduce management responsibilities
- Exchange to a property
the client can use in his or her own profession.
For example, a doctor may exchange from
a rental house to a medical building for
his/her practice
- Exchange from a partial
interest in one property to a fee interest
in another property
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NCS Exchange Professionals
5165 Johnson Dr., suite 100
Pleasanton, CA 94588
1-866-USE-1031
www.ncs1031.com
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