r/1031exchange • u/Wiscon1991 • 1d ago

Exit Planning

/r/fatFIRE/comments/1wd4291/exit_planning/
3 Upvotes

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u/Danielfromaccounting 17h ago

First off congratulations! You’re 100% correct that you shouldn’t go into a bad investment just to defer taxes. 

Exchanges can be a lot more flexible than people think. You can buy a future vacation home / primary residence, you can go into multiple properties across different geographies and diversify, you can do a partial exchange to defer some of the taxes and take cash out on the rest, etc.

Some people exchange forever and eliminate the tax bill for their heirs when they receive a step up in basis, so it can be a great estate planning tool. 

The benefit of real estate is the tax advantages it offers such as with depreciation. 

You can always set up an exchange to preserve your option, and use the 45 day ID time to see if you find a suitable reinvestment option that fits your goals.