Great Time to Sell Investment Property in Las Vegas

Since the beginning of 2013 home prices in Las Vegas have risen considerably, even as much as 40% in some locations. This has created a nice equity position for a lot of Investors. As prices slow down to a more reasonable rate, an opportunity exists for Investors to move recently gained equity into larger and more productive properties using the 1031 Tax Deferred Exchange Strategy while also deferring tax liability.

The outlook for the real estate market in Las Vegas is very positive as many projects that were on hold for the past several years are now being completed. New residential builders have begun building new subdivisions throughout the city. Several new water parks have opened up recently in the southern part of the valley, plans for large commercial developments are moving forward, and large developments that were on hold are now being completed. An upward pressure on prices now exists in Las Vegas as demand increases and supply remains low.

Using the 1031 Exchange Strategy the Investor can defer payment of Capital Gains, which is an excellent vehicle to leverage equity while prices are still affordable.

There are some requirements Investors have to take into consideration when utilizing the 1031 Exchange Strategy. These include:

  1. Property must be exchanged like kind for like kind, such as Real Estate for Real Estate. This can be Single Family Homes for Commercial units, Multi-Units, or even Land. Other property can also be exchanged, such as Vessels for Vessels or Aircraft for Aircraft, but this article will focus on Real Estate.
  2. Properties must be held for Investment or in connection with a trade or business.
  3. The Investor must purchase properties of greater value than the property he/she is considering relinquishing.
  4. The Investor must re-invest all proceeds from the sale of the relinquished property into the replacement property.
  5. The Investor must re-acquire debt equal to or greater than debt paid off from the relinquished property, or replace the debt with additional cash.

To take advantage of this strategy, an Investor has to complete the dual parts of the transaction: transferring (sale) of the relinquished property and acquiring (purchase) of the replacement property. The Investor must acquire title to the replacement property in the same manner as title was held in the relinquished property (there may be some exceptions to this rule).

The Investor must meet two deadlines, both of which begin on the date of the transfer of the relinquished property. The replacement property must be identified within 45 days after the completion of the sale of the relinquished property. The exchange must be completed either within 180 days from the date of the closing of the relinquished property, or the due date of the Investor’s federal income tax return together with all extensions.

The Investor must also follow the identification rules to successfully complete the 1031 Exchange Strategy. The replacement of the properties must be made in writing and signed by the Investor. There are two common rules to follow:

  1. Three Properties Rule: three properties can be identified without regard to their fair market value.
  2. 200% Rule: any number of properties can be identified as long as their combined fair market value does not exceed 200% of the fair market value of all of the relinquished property.

By following these steps and taking advantage of the 1031 Exchange Strategy, Investors can utilize the equity gained from increased home prices to purchase more productive properties before home prices drop again and stabilize.

Interested in exploring the advantages of using the 1031 Tax Deferred Exchange Strategy to accelerate your equity position in your real estate holdings? Call (702) 656-3264 anytime for a personal consultation with real estate expert Glenn Plantone, Broker/Owner of Vegas International Properties Realty Group. With particular specialization in Investor clients, property flipping, and HOA Foreclosure homes, Glenn Plantone has a unique and advanced knowledge of the real estate industry and can help transform the current equity position of your real estate investments into a performing and profitable portfolio.

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