5 Key Questions to Ask Clients with Real Estate Holdings
For investment property owners, real estate often represents a substantial part of their wealth, and potentially, their legacy. As financial goals evolve and markets shift, advisors working with these clients should be equipped to ask the right questions. Whether the objective is growth, income, or tax efficiency, understanding a client’s real estate strategy begins with a thoughtful conversation.
Tax Planning for the Sale of a Second or Vacation Home
Strategies for Real Estate Investors with Second Homes
Do You Need a Realtor To Do a 1031 Exchange?
If you enter a 1031 exchange for its tax-deferral benefits, you’ll need to work with various professionals, companies, and other entities to ensure a successful transaction. Some are absolutely required, such as the qualified intermediary. Others are optional, such as a 1031 exchange realtor. Do you need a realtor to do a 1031 exchange, then? Realtors can assist with identifying like-kind properties, coordinating closings, and navigating market conditions, all of which can be beneficial within the exchange timeline.
How Do You Defer Capital Gains Tax on Investment Property?
Capital gains taxes can significantly reduce the net proceeds from the sale of investment property. These gains are generally taxable at the federal level when an asset is sold for more than its adjusted basis. Eliminating capital gains is not possible in most cases, investors may consider using approved strategies to defer the tax liability and improve after-tax outcomes.
What Is the Escrow Fee for a 1031 Exchange?
A 1031 exchange supports tax deferral—but it still incurs fees, including escrow charges. Escrow fees cover the cost of securing sale proceeds in a neutral account managed by your qualified intermediary to preserve the tax-deferred status. Typically ranging from 1–2% of the property value, these fees are classified as exchange-related closing costs—which reduce your reinvestment requirement, rather than being independently deductible. Realized 1031 shares a clear guide below explaining how escrow fees work and their impact on your exchange.
