1031 Fun Facts with Tina Colson-Jones
Gotta Minute – Learn A Lot!
Discover the legal ways to access cash through a 1031 Exchange in our latest video!
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Tina Colson-Jones: Whether selling or purchasing an investment property, real estate investors often want to replenish their cash after the improvements are made to the property. The question is when to pull the cash out of the transaction so you don’t end up paying tax on the funds received. When improving property prior to sale, the cash you put in to make improvements is now considered part of the equity when the property sells. Reimbursement of the cash at closing will trigger taxable boot in an Exchange.
Although not advised, a cash-out refi, second mortgage, or home equity line of credit secured by the relinquished property has been done, and the mortgage is paid off at closing as part of the 1031 transaction. It is best to make those improvements and season the debt for a period of time before selling. If a cash out refi had been done, followed by an immediate sale, the transaction may trigger boot. The better option is to complete the Exchange and then do a cash out refi on the replacement property.
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David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
Whether working through a 1031 Exchange with Equity Advantage, acquiring real estate with an IRA through IRA Advantage or listing investment property through our Post 1031 property listing site, we are here to help Investors get where they want to be. Call them today! 503-635-1031.
"WASHINGTON STATE LAW, RCW 19.310.040, REQUIRES AN Exchange FACILITATOR TO EITHER MAINTAIN A FIDELITY BOND IN AN AMOUNT OF NOT LESS THAN ONE MILLION DOLLARS THAT PROTECTS CLIENTS AGAINST LOSSES CAUSED BY CRIMINAL ACTS OF THE Exchange FACILITATOR, OR HOLD ALL CLIENT FUNDS IN A QUALIFIED ESCROW ACCOUNT OR QUALIFIED TRUST." RCW 19.310.040(1)(b) (as amended)
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
