Benefits of Exchanging
The taxpayer seeking the opportunity to maximize the performance of investments by exchanging and deferring taxes can:
· Increase equity by paying no capital gains tax on realized gain when changing investments.
· Increase appreciation by acquiring property that will appreciate more quickly than the property relinquished.
· Consolidate assets by combining several properties into one larger or more manageable asset.
· Diversify holdings by exchanging from one large asset into several smaller ones.
· Relocate or increase investment holdings into a more preferable geographical area.
· Dispose of poorly performing property through an exchange that would otherwise not be possible through a sale without creating tax problems.
· Increase net cash flow by exchanging into property with better financing.
· Increase cash flow and financing opportunities by exchanging from bare land into improved property.
· Receive "non-taxable cash" by acquiring property that can be encumbered.
· Increase depreciable property basis by exchanging into higher valued property through leveraging.
· Increase depreciable property basis by exchanging from bare land into improved property.
· Estate planning by purchasing possible retirement residences in advance of retirement or dividing real estate holdings prior to distribution to heirs.
· Conserve and compound an estate by consistently exchanging into more valuable properties by leveraging with the deferred gain.
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