Successful real estate investors build large tax liabilities. Sometimes those liabilities are big enough to make an investor think again about selling an appreciated property and face huge capital gains. While savvy investors can leverage tax-free exchanges they typically just delay the inevitable – holding onto properties longer than they should or selling at a loss.

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Welfont Group helps clients combine the 1031 Exchange with the IRS Section 170 Bargain Sale to create a more financially viable outcome. If done correctly, the IRS Section 170 Bargain Sale allows clients to divest of a property held in a 1031 Exchange, essentially cashing in your chips and paying little to no capital gains tax, depending on the variables of the transaction.

Welfont Group is the expert in managing these types of transactions. It creates a win, win situation for everyone involved but must be done with expertise and experience. Combining these two transactions creates exponential value for sellers that are seeking to preserve wealth by doing smart things in a good way.

What is a 1031 Exchange?

A 1031 Exchange is the sale and purchase transaction that follows a very specific set of prescribed procedures and rules. It allows the seller to defer some of all capital gains tax to a future point in time.

In a set amount of time, the seller has to identify and purchase a new property of greater value. The property must be purchased within 180 days from the sale of the original property. If the new property is less than 100% of the value of the original property then the seller may be required to pay tax on the remaining amount. Seller can hold or sell the property as they wish.

The primary advantage of the 1031 Exchange is that it allows the investor to re-invest any taxes that would have typically been due on the sale of the original property.

The main disadvantage of this type of transaction is that at some point in the future, the properties value will have appreciated and the investor will want to sell but will now be required to pay out the original tax bills.

The Welfont Group is an expert in the 1031 Exchange commercial real estate deals. They have acquired over 10 million sq. feet of commercial space; have conducted business in over 30 US states and helped their clients earn more than 200 million dollars in exchanges. Using the IRS Section 170 Bargain Sale tax strategy, the Welfont Group has helped America profitably divest itself of more than ten million square feet of under-utilized and distressed commercial real estate space, creating new opportunities and stimulating the economy along the way.