HomeVestors Knows How to Find Desperate Seller and Utilize A 1031 Tax Exchange

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Find desperate sellers and fund the purchase of their property through a 1031 tax exchange.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years. The company knows that investing in real estate can be really challenging.  Besides obvious hurdles, one of the greatest limitations investors face is funding.  Without adequate funding, it’s almost impossible to afford the enormous down payments that are often required to secure loans, or to pay for expensive renovations.  Savvy investors know that they can still make big investments through discount purchasing, while at the same time cutting operation costs by avoiding fees and taxes. One way investors can buy at discounts is by buying from desperate sellers and they can earn tax savings through a tax-deferred exchange also called a 1031 tax exchange.

Let’s say an investor sold a piece of property and made some gains from the sale.  Those profits are subject to Federal and state taxes, otherwise known as capital gains taxes. Put together, they can dig into as much as 44% of the investor’s profit, depending on their income bracket, whether the gains are classified as Short or Long-Term capital gains, and the state in which the property sold.  These taxes can be legally waived through a 1031 tax exchange.  To qualify for that, the investor is required to use part or all of the money earned from selling, in buying a new piece of property.  If they fail to apply any portion of the money towards the new investment, that portion gets subject to capital gains taxes.  In addition to the numerous IRS rules and guidelines governing the 1031 tax exchange, the new property purchased has to strictly be used as an investment property such as a rental property and cannot serve as the investor’s private residence.

In making the choice as to what kind of property is invested in, the investor might want to consider buying from desperate sellers.  Desperate sellers are those who are more concerned about selling quickly and would sell for steep discount, often at a loss.   These sellers are almost always facing foreclosure.

Buying from desperate sellers is a popular means of saving money and if done in conjunction with getting a 1031 tax exchange deferred payment, may earn the investor thousands of dollars in profits and savings.   The investor must however familiarize themselves with all the IRS rules governing a 1031 tax exchange or they can be disqualified from the tax exemption.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.

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