How to use a 1031 exchange to buy real estate property

The example below shows you a teacher analysis of the mass effect of how an investors equity could potentially increase on top of period if they performed 1031 Exchanges every 5 years into buying new properties in Columbus, GA, and if they didnt utilize 1031 squabble at all. In the right column of this example, the opportunist pays capital gains taxes on each property sale and later reinvests in supplementary properties. In the middle column, they utilize 1031 Exchanges for all property sale and subsequent purchase. If the pioneer is intellectual and takes advantage of the tax code, they will action 1031 Exchanges subsequently each property sale and potentially ensue their equity to just over $2.9M higher than 20 years.

If, however, they adjudicate they desire to pay capital gains taxes later than each property sale, their equity lonely grows to $1.7M. The difference, $1.2M, is the sure effect of sequential 1031 Exchange. all the details for this analysis are shown below. This
is merely a teacher example, and may not be indicative of individual real estate investors results, which may differ.

Sell obsolete and purchase supplementary Investment Property every 5 Years con 1031 Exchanges complete NOT operate 1031 Exchanges Year 1 Cash Investment (proceeds from sale of home) $1,400,000 $1,002,500 Year 5 university Proceeds After Sale $1,683,669 $1,144,689 Year 10 literary Proceeds After Sale $2,024,815 $1,307,046 Year 15 speculative Proceeds After Sale $2,435,085 $1,492,430 Year 20 school Proceeds After Sale $2,928,484 $1,704,108

Hypothetical Equity construct over 20 Years in the same way as and Without 1031 Exchanges

Assumptions- every Hypothetical:
Start like equity from investors rental house sale
50% loan-to-value upon each purchase
Appreciation Rate 3%
Costs of Sale 5%
Tax Rate 30%
Reinvest every proceeds from my property i want to sale
Buy twice as much property as Proceeds After Each Sale

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