Estate Planning Strategy

Consider this, if you sold an investment property outright without using any tax-deferment program like a 1031 exchange, the federal capital gains tax and state capital gains or depreciation recapture (depending on what type) adds up. Imagine the taxes you would be paying each time you bought and sold properties over the years. This would result in a substantial amount of capital gain taxes and limit the amount of impactful wealth you would be able to generate.

Alternatively, if you sell an asset with the intent to exchange it through a 1031 intermediary, like Xchange CRE, you could avoid the hefty taxation when structured correctly and exchanged in full. Finally, for any 1031 investment property, you’re holding upon your death, your heirs get the stepped-up basis. The result– you would avoid paying capital gains are all those exchanges (sales).