As is known that over the years, the tax basis for a 1031 like kind exchange properties are likely to be a number close to zero. What’s the best strategies to exit a 1031 like kind exchange?
1. Hold until you die. Your heirs will get a step up in basis so the tax goes away and the property receives a new basis for the heirs. A great way to go. And probably the ultimate way since all roads lead there any way.
2. Exchange into vacation rental property that you can have managed and use some for personal use and generate income off of as well.
3. Use the 1031 to purchase investment property that you later convert into a succession of primary residences. By doing this you can ultimately get a portion of the profit tax free although you will have to re-capture depreciation.
4. Purchase managed properties that you don’t have to touch – Triple Net lease (NNN) or ground lease properties. Or large tracts of agricultural land that is share cropped out.
5. Go passive with Delaware Statutory Trust (DST) and tenancy in common (TIC) which qualify for 1031 treatment.
J Y Tax & Accounting Services has years of experience in assisting our clients with 1031 like kind exchange transactions and tax reporting. If you are interested in knowing more about 1031 like kind exchange transaction, please give us a call at 980-243-2433.