As more and more Americans recognize and utilize real estate acquisition as a means of producing and preserving wealth and assets, the need for experienced exchange companies has grown. 1031 exchange expert, Kevin Levine explains how the 1031 exchange process is a valuable tool for investors and how they can utilize a reverse 1031 exchange for securing more properties.

A 1031 exchange is a beneficial tax shelter when selling investment or business property. The money that you receive from selling your old property is reinvested into a new property–thus the “exchange” of the old for the new.

However, as a busy and savvy investor always looking for a fresh opportunity, you might be presented with a deal to buy new property (perhaps a great offer you just cannot pass up) before selling your old property. So, what do you do in this case?

“You still have the option of deferring capital gains through the process of a ‘reverse exchange,’ a transaction that allows you to ‘park it’ for awhile since your exchange company buys your new property and holds it until you are able to close on the sale of your old property,” explains Levine, Vice President of Accommodator Finance Company located in Woodland Hills, California. “The exchange aspect, in this case, occurs when you acquire the new property from the exchange company.”

Although a very valuable tool, a reverse exchange can be a complex process when not handled by an experienced exchange company. According to Levine, “It is your job to ask questions and research your selected exchange company’s history with handling investment properties.”

He also cautions that one needs to be aware of some of the possible difficulties in a typical reverse exchange. “Financing the purchase of your new property is the first thing to consider, even though your exchange company will be acquiring the property, you are still responsible for its actual purchase,” Levine explains.

But, “how,” you might ask, are you expected to buy this new property when you have no proceeds from the old property since it has not sold? “Many clients don’t realize that they need to be in the position to loan the accommodator company their personal funds or borrow them from another source,” says Levine. Another option investors should consider is seeking out a bank or a portfolio lender who works with reverse exchanges since traditional mortgage lenders are not an option for these transactions.

“You will need to make sure that financing on your new property is assumable when you purchase it back from the accommodator company and that you are aware that a reverse exchange can be expensive,” Levine says. He does, however, stress that the “expense” of a reverse exchange pales in comparison to the tax savings one will achieve.

Accommodator Finance Company is a Southern California-based 1031 exchange company, bonded with FEA membership. The company specializes in tax solutions for real estate investors. Accommodator is positioned to safely secure its clients’ interests and assure the maximum benefit and flexibility utilizing the current tax laws.

For more information contact:
Tiffany Walton
Marketing Manager
www.accommodator.net

This entry was posted on Tuesday, February 20th, 2007 at 6:52 pm and is filed under Real Estate. Tags: America bank California finance mortgage lender Paris Property Real Estate real estate investor Real estate investors Southern California . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.