3 Reasons To Consider 1031 Exchange Services When Selling Your Rental Property

Are you considering selling one or more of the rental properties that you currently own? If so, you will want to reach out to your real estate agent regarding 1031 exchange services before listing any of your properties for sale. 

If you are not familiar with 1031 exchange services, these services help individuals like yourself take advantage of a unique tax break opportunity known as a 1031 tax exchange. Read on to learn more about some of the benefits you can expect to enjoy when taking advantage of this opportunity. 

Defer Tax Obligations

The primary benefit associated with a 1031 exchange is the ability to defer certain taxes that are typically due after selling any type of real estate. These taxes include both personal income taxes and capital gain taxes. Depending upon how much equity you currently have in your real estate investment, these taxes can consume a considerable percentage of your overall profits. This can be especially problematic for individuals who were counting on these profits to purchase a new piece of real estate. That is precisely why 1031 exchanges are made available solely to individuals who reinvest the money earned from the sale of one rental property into buying a new property. This new purchase must also be made within a certain time frame in order to qualify for the tax deferment. This is one of the reasons why going through a professional 1031 exchange service can be so helpful. 

Grow Your Wealth

As you may already know, wealth and income are two very different things. While income represents how much money you have coming in each week or month, wealth represents the total value of your assets, minus any debts that you may owe. 1031 tax exchanges allow you to help grow your wealth by increasing the overall value of your assets without the need to invest additional money out of your own pocket. 

Increase Your Income

In addition to growing your wealth, 1031 exchange services can also help you to increase the amount of income you have coming in. This benefit is made possible by the fact that this type of exchange ultimately allows you to purchase a more valuable piece of real estate. Since you will naturally charge a higher rent each month for the more valuable property, you will be able to enjoy a greater income each month. While this benefit represents an awesome opportunity for any real estate investor, it can be especially beneficial for individuals who primarily chose to invest in real estate due to the opportunity it presents to provide a passive income stream.