| This reading, as you see from the subject, is for | | | | Your replacement must comply with at least one |
| you as a real estate investor as well as brokers, | | | | of the following. |
| agents and real estate professionals who desire | | | | 1. You as the owner may identify, regardless of |
| to create long term cash flow and income out of | | | | their property value, up to three properties. This |
| your present or soon acquired equity in residential | | | | is The Three Property Rule. |
| real estate property you own. As you will see, in | | | | 2. You may also choose the 200% of Fair Market |
| a changing world and a fluxing real estate market | | | | Rule which allows you the exchanger to identify |
| on a national level with the decreasing value of | | | | more than three potential replacement properties. |
| single home residential homes, there are alternate | | | | These must have a total fair market value not |
| ways and ever tried and true methods of | | | | exceeding 200% of the final sales price of the |
| increasing your income as you diversify in you | | | | relinquished property. |
| techniques and marketability. | | | | The requirements to fully defer are: You must |
| Let's delay no further, and allow us to explain to | | | | reinvest 100% of proceeds. You as the investor |
| you the benefits of the 1031 exchange and Triple | | | | must acquire newly acquired property of same or |
| Net Commercial Properties. If you are a | | | | greater debt. During the time between your old |
| pre-qualified real estate investor, for instance, and | | | | property's sale and purchase of your new |
| your aim is to set up favorable ways to organize | | | | property, you cannot touch the money. |
| you estate, in turn benefit your family, and | | | | In triple Net Lease your tenants are required to |
| generate a positive cash flow along with no | | | | pay all insurance, maintenance and taxes. Also |
| property management responsibilities, along with | | | | included as the responsibilities of the tenant are all |
| eliminating paying capital gain taxes. Read along | | | | regular expenses of ownership, which leaves day |
| and make note of the information you will be | | | | to day management to the tenant, not the |
| learning, or refreshing yourself in memory. | | | | owner. |
| A solution many real estate investors and owners | | | | 15-30 years are the norm for most commercial |
| have found to beneficial to their future planning | | | | property Triple Net Leases. Rental payment |
| and next generation inheritance beneficiaries is the | | | | continues throughout the term of lease. Credit |
| 1031 exchange. Capital gains taxes are deferred | | | | rating of tenant is very important. |
| on your sale of your property. You may also | | | | Now on the Triple Net Lease you have many |
| re-invest your equity from the sale of your | | | | advantages on you 1031 investment property. |
| investment property and place the equity as a | | | | You as the owner are relieved from the daily |
| re-investment into the TIC investment property, | | | | management issues. Corporate tenants pay |
| which is passive. If you own a TIC, you have less | | | | potential steady income. Mortgage loans at |
| interest than a commercial grade property. You'll | | | | favorable rates are possible for you with long |
| have no daily hassle of trash, turnover, tenants or | | | | term leases to corporate tenants having credit |
| toilets, and therefore enjoy the benefits thereof. | | | | ratings. Appreciated residual values because of |
| One thing to keep in mind, naturally, is that you | | | | middle income areas with desirable traffic |
| will still face fluctuations in the real estate market, | | | | patterns, are another advantage. |
| an inherent risk as well as expenses associated | | | | Many companies desire to lease their business |
| with speculative investment strategies. | | | | property from owners such as you. This allows |
| If you wish to allow for more alternatives for | | | | them freedom to occupying companies to |
| your heirs, this can simplify your estate for | | | | customize their environment without committing |
| yourself and them. One heir can keep a fractional | | | | to ownership. |
| interest while another heir can liquidate their | | | | 1031 exchange investors, such as yourself |
| fractional share of your estate. | | | | potentially, have since the 1990's reinvested |
| 1031 exchange is not an avoidance of tax, but | | | | equity into triple net lease investment properties |
| actually a rollover of equity of like properties. In | | | | structured as Tenancy-in-Common (TIC). There |
| the IRC Section 1031 the exchange of business | | | | are advantages to this such as the wide selection |
| use or investment property of any kind for any | | | | of qualified exchange 1031 triple net properties, |
| other business use or investment property the | | | | diversification, real estate companies typically |
| recognition is that there is no gain or loss. When | | | | locate these properties, you can potentially invest |
| you meet the 1031 tax exchange criteria in the | | | | in institutional grade properties as the exchanger, |
| 1031 tax exchange, you have a deferred tax | | | | you may benefit from non-recource debt, and the |
| projected until sometime in the future tense, | | | | range of opportunities on these investments can |
| most times until the time of the selling of your | | | | range from as little as 50 thousand on up to |
| newly acquired property. This deferral can | | | | several million dollars for you as an investor. |
| continue for you through any number of | | | | So you see, as a prudent real estate investor, |
| exchanges up to the point when tax liability | | | | there is much to consider in the way of trading |
| passes into your estate, as this is an individually | | | | your current Residential real estate that has |
| held investment. | | | | equity into some commercial real estate providing |
| There are some time restraints for the exchange. | | | | stable long-term cash flow. The Triple Net |
| As it is called, the Acquisition Period, 180 days is | | | | Commercial Property gives you the provision of |
| the maximum number of days allowed from the | | | | long term professional tenants. You can pass on all |
| closing of relinquished property or until the due | | | | operating costs to your tenants. Owners don't |
| date of that current years tax return, whichever | | | | have the daily hassle and headache of |
| of the two comes first, in order to acquire your | | | | management. Also remember your taxes on |
| replacement property. You, the exchanger, must | | | | realized gains can be deferred when you move |
| first identify the property within the first 45 days. | | | | equity from Residential into Triple Net Commercial |
| This is the Identification Period, identifying the | | | | Properties. |
| replacement property. | | | | |