707: 1031 Exchange Deep Dive: What to Know and Mistakes You MUST Avoid
BiggerPockets Real Estate Podcast
BiggerPockets
4.8 • 16.5K Ratings
🗓️ 29 December 2022
⏱️ 54 minutes
🧾️ Download transcript
Summary
The 1031 exchange is a strategy that helps investors build more passive income, with fewer properties, all while avoiding the tax man. While many real estate investors know about this strategy, only a few of them know it well enough to pull it off. The rules are simple; sell a property, buy another property with the proceeds, and pay no capital gains tax. But, this is far easier said than done, and it’s much easier to make mistakes than most people think. Even our real estate hero, David Greene, had a 1031 exchange go awry.
To clear up the misconceptions, highlight the common mistakes, and guide us to tax-advantaged freedom, we’ve brought on 1031 exchange expert, Ryan Finch, to the show to share everything he knows about this misunderstood, often misused strategy. Ryan is a real estate investor at heart, house hacking as a sophomore in college to live for free. After working at multiple commercial real estate and development companies, he got the itch to start investing heavier himself and help others propel their wealth.
Now, Ryan works to help real estate investors and everyday homeowners make the most out of their equity. Ryan has unlocked the tools that have allowed those with home equity to build passive income streams, buy bigger, better properties, and reduce much of their landlord burden, all in a single transaction. If you’ve been sitting on some post-2020 equity, this episode will teach you how to use it as fuel for your financial freedom fire, all while ditching the tax bill that comes with selling!
In This Episode We Cover:
The 1031 exchange explained and using it to avoid taxes (legally)
Converting home equity into cash flow and when selling makes more sense than refinancing
How both the government and real estate investors benefit from the 1031 exchange
What to know before you use a 1031 exchange and the three rules you MUST pay attention to
1031 tax benefits, depreciation, and cost segregation to massively lower your tax bill
The most common mistakes investors make when doing their first 1031 exchange
And So Much More!
Links from the Show
Find an Investor-Friendly Real Estate Agent
Listen to All Your Favorite BiggerPockets Podcasts in One Place
Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts
Get More Deals Done with The BiggerPockets Investing Tools
Find a BiggerPockets Real Estate Meetup in Your Area
1031 Exchange—A Definitive Guide for Real Estate Investors
Will a 1031 Exchange Help Grow Your Portfolio?
How to (Legally!) Avoid Capital Gains Taxes on Real Estate
Rich Dad’s CPA on How ANY Investor Can Avoid Taxes
Connect with Ryan:
Phone Number: 720-439-6540
Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-707
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Transcript
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| 0:00.0 | This is the Bigger Pocket podcast show |
| 0:02.8 | 707 one of the most common phrases we get is I wish I talked to you three months ago |
| 0:07.9 | We should talk to you six months ago. I wish I would have sent my mom to you last year when she was in the middle of this |
| 0:13.0 | And so we really like to talk with people early so they're aware of their options so that you know |
| 0:19.7 | No one needs to be paying taxes |
| 0:22.0 | Unnecessarily what's going on everyone? |
| 0:24.1 | This is David Green your host of the Bigger Pocket real estate podcast here today with a very very very good episode for you |
| 0:31.5 | Today I interview Ryan Fitch who is a 1031 expert runs a company that helps people with 1031s and does |
| 0:38.2 | Consulting to help people build wealth through real estate and we get all into the 1031 exchange in this episode |
| 0:43.6 | You're gonna hear things that you didn't know existed |
| 0:45.6 | You're gonna hear about common faux pos that you can avoid you're gonna hear about strategies that you probably didn't know |
| 0:50.5 | We're open to you and how you can go from being an active investor into a passive investor |
| 0:55.0 | This is an amazing episode. I'm very happy to bring it to you today |
| 0:58.4 | So I don't want to take too long before we get to Ryan but before I do today's quick tip is |
| 1:04.7 | Don't delete all the knowledge you have as an investor |
| 1:07.7 | We often make decisions based on our emotions and if you get in a bad emotional state |
| 1:11.8 | You don't like your portfolio. You're in pain for months going on |
| 1:14.7 | You just want to get rid of the whole thing you can easily make bad choices |
| 1:19.2 | In fact buyers look for sellers that are in a position where they're in pain and they just want out |
| 1:24.0 | And that's how they get the best deals use the bigger pockets community to help you |
| 1:28.1 | There's people out there that can give you advice that you didn't even know was a possibility |
| 1:31.7 | An example of that is a podcast that we have today |
... |
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