If you’re thinking about selling your rental property in Orange County, but are afraid of the capital gains, guess what? You’re not alone.
You can click below to find out more, but right now I’m going to show you some of the basics on how to do a 1031 Exchange, when you sell your rental property and buy another one. And real quick, a 1031 Exchange is when you sell one rental property, and buy another one, with very specific rules and timetables, and can defer your capital gains and other taxes, sometimes forever.
Book a call with Maxine Golden, the 1031 Exchange Lady.
HOW TO DO A 1031 EXCHANGE IN ORANGE COUNTY
Step 1: Talk to your accountant.
Why your accountant? Your accountant knows what your taxes look like, and how you filed your tax return on your rental property in the past. So this is really, really important.
The IRS website will tell you that 1031 exchanges can save money on your capital gains taxes, and other taxes you would pay, if you directly sold your property, instead of exchanged it.
And the one thing that really frustrates me, is that some rental property owners don’t realize that they can defer these very big taxes, sometimes forever, with the 1031 Exchange.
Step 2: Get ready to sell and buy.
At this time. It’s also really, important to communicate with your agents – your selling agent, lIsting agent, and the agent in which you might buy your property with. Often the same agent, however, they may be in different states. And it’s really best to get an agent that’s experienced in 1031 exchanges. Someone like myself, who’s done many of them.
Step 3: Sell your rental property.
Meanwhile, you might also be looking at properties to buy.
Oh, by the way, if we haven’t met, I’m Maxine Golden. I’m a real estate broker and salesperson here in Orange County. And I have been helping owners like you to buy and sell properties since… I’m not going to tell you since when, but needless to say, I know how to help you with this stuff.
Step 4: Funds go to Qualified Intermediary.
When you sell your rental, make sure that all funds go directly to a “Qualified Intermediary.” You are not allowed to touch those funds.
Step 5: Designate your properties.
You’ve been looking at properties to buy, and you must designate to your “Qualified Intermediary,” up to three properties that you are going to buy. Sometimes, people like to make offers on the properties they’re buying while they’re still in Escrow with the first property that they’re selling. This 45-day deadline is crucial, and cannot change.
Step 6: Contract to buy your new property or properties.
Step 7: Authorize your “Qualified Intermediary.”
Authorize your “Qualified Intermediary” to send the funds to close your new property. Remember, you’re not going to be the person who sends the money. The “Q.I.” sends the money, and that’s going to be a situation where you must close on your new property within 180 days past the time that you sold your previous rental.
Step 8: File your income tax.
File your income tax returns that reflect your Exchange, that shows your new property, and shows that you will have a tax-deferred Exchange.
I started the 1031 Exchange Lady Channel on YouTube to help rental property owners like you buy and sell properties and defer your capital gains taxes with a 1031 Exchange.