If you own any property or you’ve had your dip into the pool of real estate, you may have heard of property exchange. Within this agreement, you can acquire a new space in exchange for one that you will release. You may be curious about when this would be a good option as opposed to holding on to your existing property or selling it off. Here are a few situations that can make property exchange a good move for you.
You’re looking to offload your property tax-free
When going through with a property exchange, the law dictates that the agreement is tax-deferred. That is because it is merely an exchange of ownership and each party receives carryover from the other. It usually covers any like-kind properties, though if you are unsure whether your property qualifies, it would be wise to reach out to a professional and determine the nature of your prospective and existing properties.
Leveraging that into DST investments can even yield you ownership of multiple properties that result in a steady stream of income without the necessities of direct management like in arrangements that make you the immediate landlord and such. With DST, you get fractional interest along with other trustees, but you are still recognized as a full owner.
That makes exchange a reliable choice if you want to release your property without being charged taxes for the year that you would acquire new assets.
You’re interested in getting new property
This idea is an excellent way to acquire new property without having to search through the buy-and-sell market. You also won’t need to shell out a hefty sum to purchase the new place since you will trade in your property of equal value.
This method is also suitable if you’re looking at expanding your assets since you can get multiple smaller properties in exchange for one of yours as long as their total value matches your single property.
There are also options available that allow a delayed exchange, in case you want to essentially release your property but haven’t found the perfect replacement suited for your needs just yet. Through this method, you would have a go-between to hold on to the funds produced from releasing your property, ready to be used when a new prospect is prepared to complete the exchange.
You have a property that you don’t know what to do with
If you have a property that isn’t actively providing anything for you, you may be wondering whether you should put it up on the market or find some more commercial use for it. Instead of letting it collect dust and eventually waste away, you can exchange it for other like-kind land and structures that can end up providing you with more profit or a more substantial investment. This way, you can directly deal with other individuals who can put it to good use while receiving assets that may benefit you more.
There are a lot of things you can do with your property, and finding the right path depends on what you’re looking for. With the guidance of experts on the field, you can end up with something better than what you started with.