Do you have investment properties in California? I am going to tell you why it may be better to bring that investment money and invest it in Arizona.
Hey everyone, I’m Dean Ouellette with the Phoenix Real Estate Guy. Today we are going to be talking investing and 1031 exchanges. If you are interested in this market get some more information here.
If you have an investment property and sell it, you are going to have capital gains taxes, and those are going to hit you pretty hard when you go to sell, especially if you bought in California in 1978 and that $70,000 property is now worth $700,000.
One thing you can do is you can sell those properties and reinvest that money in real estate in Arizona. Let’s say you have two properties in California, one is a single family and one is a duplex, between the two of them they are worth one and a half million dollars. That’s also one and a half million dollars invested in just two assets.
What we can do is bring that money back into Arizona using a 1031 exchange and spread that risk out a little bit. Now instead of two properties and three doors which are bringing you income you can bring that money to Arizona and maybe buy three condos near ASU and five single-family houses. The money you have invested is the same, but you spread out that risk.
If you have one door in California which goes vacant for two months you are losing one-third of your income, whereas if you have one door that goes vacant for two months in Arizona you spread that risk out and you are not losing as much monthly income.
There are a lot of nuances with the 1031 exchange and we can do a video discussing that, and I can talk to you in detail in person about what you can and can’t do, and how we can make it really work for you. But, if you are an investor who has money in another state and would like to bring it to Arizona, the good news is there are ways to do it and avoid the taxes.
If you’ve got any questions on this you can email me [email protected] and again we’ll do another video on 1031 exchanges and go into more details on that in the upcoming weeks, but for now, if you have any thoughts or questions on this leave a comment or shoot me an email.