The Realized Team’s Picks
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.
Does a 1031 Exchange Eliminate Capital Gains Tax?
A 1031 exchange is a tax-advantaged investment strategy that many accredited investors turn to to preserve their wealth. One question some may ask is: “Does a 1031 exchange eliminate capital gains?” The answer is no — the like-kind exchange doesn’t eliminate your tax liability after making a profit during a property sale. Instead, this strategy defers capital gains taxes.
Depreciation Recapture in a 1031 Exchange: What To Consider
When undergoing a 1031 exchange, investors often focus on deferring capital gains taxes associated with the sale of investment property. However, another important consideration is depreciation recapture—a provision that may require a portion of prior depreciation deductions to be taxed upon a triggering event, such as the sale or disposition of the asset.
Can a Delaware Statutory Trust (DST) Be Gifted to Someone Else?
Delaware Statutory Trusts (DSTs) have gained traction among investors for their potential benefits, like passive income and access to institutional real estate. When paired with 1031 exchanges, DSTs may also offer deferral of capital gains taxes which has made them a consideration in certain estate planning and wealth transfer strategies.
