IRVINE, CA—A recently closed transaction is a textbook example of how and why 1031 exchanges are powering an already healthy multifamily market and pushing Orange County into record territory, Colliers International executives tell GlobeSt.com. But, while values have risen to record levels, investors—who have to pay as much a 40% in capital-gains taxes on their investment properties if they sell them outright and pocket the profits—have an alternative, SVP Patrick Swanson and associate Brenden Felix say.
Sometimes it's an unsophisticated investor who only wants to leave a legacy property to family heirs without having those heirs inherit, along with the property, a mammoth tax bill. Thanks to the IRS, they can avoid that if they trade up into larger properties. This guarantees the nation will have a stock of housing, but also allows investors to realize the gains not in cash, but in their new properties' values.
We recently sat down with two of Swanson and Felix to discuss their example of this phenomenon.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
