Investor Series - Tax Savings with a 1031 Exchange with John Mangham

Summary: In this episode of The Perfect Property, Juli talks again with CPA John Mangham. John, known as “The 1031 Guy,” has been in real estate in Atlanta since the mid-80s. He’s an expert on the topic of this episode, which is buying or selling properties using 1031 exchanges. If you’re not sure what a 1031 is, it allows you to sell investment properties to reinvest and potentially save money on taxes!

As John discusses, there are four essential elements to a 1031 exchange: tax savings, investment property, time frame, and equal or greater value. He goes into detail on these four requirements and covers what qualifies as an investment property, how to understand the “equal or greater value” rule, and what exactly “like kind properties” are. John also talks about what you need to know about doing 1031 exchanges in different states. 
 

What You’ll Learn: 

·         Who is the audience? (0:49)

·         The four essential elements of a 1031 exchange (2:55)

·         What qualifies as an investment property? (9:57)

·         The “equal or greater value” rule of a 1031 exchange (13:47)

·         What are “like kind properties?” (15:31)

·         Selling and buying in different states (19:41)

·         Review of the four essential elements (22:12)

·         One thing investors need to know about 1031 exchanges (23:18)

·         How to contact John and talk about 1031 exchanges (25:19)

Key Points:

“Our audience would be anybody who owns real estate that is not their residence or a pure vacation, personal use property. It’s properties that they’ve invested in and they may have inherited the property, they may have received it 10 or 20 years ago, they may own it in conjunction with siblings… There’s a big gain in those properties. So, when we look at our audience, it’s the investor and even people who don’t think of themselves as investor.” 

“The average 1031 exchange will start and complete in 62 days.”

“From closing you have 45 days to pick out what you’re going to buy.” 

“If there’s one practical piece of advice that I give everybody in dealing with these time periods: start shopping. Shop early, shop often, and start shopping before today, before today’s closing.”

“If we have a rental house and its been rented for a year or more, a couple or a few years, that starts to completely comply with the rental definition, the ‘held for investment requirement.’ Also, do you have multiple properties?... All of that sets the pattern that you’re an investor.”

“A vacation home, in and of itself, if it’s purely personal use, if it’s only a property that you and your family go to, the vacation home won’t qualify for a 1031 exchange.”

“Equal or greater is if you want to save all the taxes. If you go slightly under, it’s not the end of the world. In fact, if it’s a really killer deal, then I would suggest that’s the way you ought to do it.”

“When we say ‘like kind,’ you can interchange ‘like kind’ and ‘investment property’ because that’s really what all of this talks about.”

“Because it’s federal tax law, the 1031 exchange applies anywhere in this country.”

Links: 

John’s Phone Number: 404-352-1031

John’s Email: jmangham@starker.com

Juli’s Email: juli@theperfectproperty.com

Juli’s Phone Number: 404-668-8975 (call or text)

The Perfect Property Website. www.theperfectproperty.com 

https://linktr.ee/julistgeorge