Property Exchanges in Sin City: 1031 Exchange Insights

Unpack the latest twists and turns of the Las Vegas real estate market as we return from a brief hiatus, ready to arm you with all the knowledge you need to navigate the shifting landscape. Our recent episode is a goldmine for anyone looking to understand the vigor of a market adjusting to lower interest rates, increased client activity, and the resilience of stable inventory and appraisal values. We're busting myths about market crashes and giving you our hot take on the 2024 market forecast, providing you with the insights you need to stay ahead of the curve.

Strap in for a behind-the-scenes tour of the Las Vegas Strip's transformation ahead of the Super Bowl and the regulations taking aim at reining in Airbnb chaos. Our discussion extends beyond the glitz, focusing on the practicalities of navigating large-scale events and the innovative use of AI technology ensuring peace in our neighborhoods. Plus, we're laying out the intricacies of the 1031 exchange for investors, demystifying tax deferral, and emphasizing the key roles and timelines crucial for a successful transaction. This episode is where the rubber meets the road for savvy investors and the city's future.

Transcript

Speaker 1: 0:15

Hi, thank you for joining us back here on Vegas Realty. Check your local Las Vegas real estate news show. I'm Trish Williams.

Speaker 2: 0:22

And I'm Tiana Carroll. Thanks for joining us and welcome back to the show.

Speaker 1: 0:26

Oh gosh, I feel like I've been gone forever it must feel weird. Yeah, it does, it does.

Speaker 2: 0:31

I've been here like every day and then you got like three or four weeks that you were.

Speaker 1: 0:36

Yeah, yeah, definitely a well well needed vacation, well deserved indeed. Since I've been back, it's been crazy. So right before I left they announced that you know rates were dropping. Yeah and whoa like talk about like phone blowing up.

Speaker 2: 0:54

Yeah, talk about call to action. Call to action yeah, it's been insane, I'll have to agree with you there. There's been phone call after phone call and appointments and just people like, okay, I'm ready.

Speaker 1: 1:05

I'm ready. I'm ready to list, ready to sell, ready to buy, like everyone's ready to do things now.

Speaker 2: 1:11

Let's do it now.

Speaker 1: 1:12

But we are at Christmas week, so things are slowing down a little bit as far as like buyer shopping couple days before Christmas.

Speaker 2: 1:18

Yeah, yeah they're wrapping presents or baking cookies or traveling or doing whatever they're doing. So, yeah, it's a pause, but that the last three weeks is definitely revving up for spring, revving up for a certain yeah, and so let's bring this up.

Speaker 1: 1:34

I had, I had an interesting conversation with someone the other day and they said that the rates are the rates are coming down because the market crashed. And I'm like, okay, so does that mean we're in a crash right now? Well, I think.

Speaker 2: 1:50

I think it's whoever you're talking to, right in a perspective of it, because we did adjust prices back in what January? Yeah, well, it was actually December of 22, november of 22, that things were sort of correcting themselves a bit right I would call it a correction.

Speaker 1: 2:07

I feel like saying that that's a matter of perspective.

Speaker 2: 2:10

Right yeah, how dramatic are you correcting, or did?

Speaker 1: 2:14

we crash. I don't know, Like. I was like so is this a crash? Is this what everybody was waiting for? Welcome to the crash.

Speaker 2: 2:20

So I think we're sort of blessed because we haven't been affected as much as other parts of the country Right, and we just have seen perpetual growth. We haven't seen any value loss.

Speaker 1: 2:31

Yeah, not much. I mean we're starting like I've seen some bigger price decreases, like over the last couple months, than than you know, probably without you know, throughout the whole year.

Speaker 2: 2:43

See, when we talk about numbers, I was going to say like we have less price decreases than we have had, but they're more substantial more substantial.

Speaker 1: 2:51

People are cutting percentage. Yeah, they're. They're cutting it at higher percentages to you know. Get these buyers in there, get their home, you know, locked up and get it sold, yeah.

Speaker 2: 3:00

So let me ask you this, because I am seeing less and less concessions now.

Speaker 1: 3:06

I am seeing that and you know a couple, like you know what. I've had people that will make offers and coming in you know quite a bit lower and they're countering. They're still holding firm in some cases. So, yes, we're, we're seeing that tighten up just a bit because concessions tighten up, yeah, with rate changes. Obviously that motivates buyers and I I foresee, like in my crystal ball, I foresee 2024, we're going to have a lot more buyers shopping in the market once rates start coming down and madness and chaos and it will be back to a seller's market.

Speaker 2: 3:43

So that's what I'm seeing. I'm going to say 24 is going to be one wild roller coaster, right you know? Because the past few years have been so mild.

Speaker 1: 3:51

Right and buyers. Time to buy is not when we're in a seller's market. It is now. Now is the time to buy because you can get into lock into a better deal than you're going to lock into once you get all those buyers out there shopping and competing against you.

Speaker 2: 4:08

Yeah, so we didn't even talk about numbers, because we jumped right into our spring prediction. So maybe the audience would like to know why we think these things. So let's go over some of our numbers for today, our active family single family listings are 3849. Yeah.

Speaker 1: 4:26

And that's a we're down, still under 4000. So that's good.

Speaker 2: 4:30

Yeah, we kind of broached over 4000 a little bit in November and then we dipped back down. But all in all, the inventory is being is staying the same the past few months. If you go October, november, december check them out, they're about the same Sold's 334 sold this week. Yeah.

Speaker 1: 4:47

And our sold numbers have stayed pretty much around the same area all year long.

Speaker 2: 4:51

Yeah, Not much of a dip there. But as we were talking about our price decreases, how many do we have this week? 250. 250. That's down from what we have had, but again those prices are larger percentages in those cuts.

Speaker 1: 5:06

Yeah, yeah, I've been talking to sellers that are just, you know it's sick of waiting for the buyers and sick of playing like the slow game and saying let's just do a huge price reduction and let's get these let's get it moved. You know we're tired of hanging around here.

Speaker 2: 5:21

Yeah.

Speaker 1: 5:22

So that's good, that's motivation. We love working with people with motivation.

Speaker 2: 5:27

So in this crash that we're in, have you seen any in this crash, as the market falls apart around us, it's all on fire. In this crash that we're in, do you see any information from an appraiser to let you think that there's a crash? Because all my appraisers and appraisals that have come in they've been pretty strong, yeah.

Speaker 1: 5:48

Good, solid. I've very, very rarely had appraisal issues, so the appraisals have been coming in strong. We had more appraisal issues when the market was on fire than we do right now. The appraisers have been appraising strong, in many cases appraising above where we're listed at.

Speaker 2: 6:04

I've gotten yep in the past six to eight weeks. I've gotten two that we've got appraisals over our offer price and I'm like, oh, those are my favorite.

Speaker 1: 6:11

Yeah, let's keep doing that. So the appraisers are not on board with the crash?

Speaker 2: 6:15

Nope, they just didn't get the memo. We should tell them we are in a crash. Guys, here we are, we're crashing, yeah, yeah. No, the appraisals have come strong and again it's just about pricing right to your market.

Speaker 1: 6:27

Yeah, absolutely. And then, yeah, that same person I was talking to, the crashor, was saying that 2024 is going to come down even more. And again, I just don't understand the mindset around that, because when rates come down, buyer's activity increases.

Speaker 2: 6:46

Buyer's activity increases and we do have we don't have a ton of inventory, so that's always going to be competitive. Some of the reasons that people are starting to say that it's going to crash is because foreclosures and stuff are coming due.

Speaker 2: 7:00

And then now people have to deal with that, but that's got to be a smaller percent than we think on. I mean, on a national level. I'm sure it sounds intense, but more localized. I don't really have a lot of people contacting me for NODs or foreclosures or anything in the selling aspect. I get them all day long from investors. We're looking for the deals. Where's those foreclosures? Did the market crash? Are we done?

Speaker 1: 7:25

Yeah, yeah, no, I haven't seen much of that at all. Anyways, I had someone that purchased a year ago, was talking to me about a short sell, but that even wasn't necessary because the Market value the market value was they could break even, just not, you know, not get any cash. So yeah, you know that happens.

Speaker 2: 7:43

So what do you got for us on news today? Ma'am I saw you just jotting down, jotting down, jotting down.

Speaker 1: 7:48

Yeah, so going back into, like, why Vegas has held steady through all of this is because Vegas has grown and is growing. Well, that's the thing. We're in the middle of a growth spurt, yeah, so substantially. We're adding so many things, are bringing in so many jobs, and we're on the map. We are I mean, we've been on the map is a small little place.

Speaker 2: 8:11

Right, we're the party town, but now we've got so much more to offer.

Speaker 1: 8:16

Yeah, so the review journal had sent out an article yesterday, I think it was. I met a loss. I'm back from vacation, so I had a loss of days, right now You're like I don't know when this happened. Yeah, but they released a design plan of the strip remodel that is going to take place for the Super Bowl.

Speaker 2: 8:38

Oh Well, and now that they're just barely getting the strip back to normal after the Grand Prix? The first one was just so much construction so much that went up so fast and they tore it all down. It looked all tore up and now it's getting back to normal. So what are the new plans?

Speaker 1: 8:55

So the new plans, it's check it out. Look at the link. Too much to go into, but it's back to the principle of my husband and I say this we love having parties at the house because it gives us a reason to remodel. So Vegas is having a party. Yeah, cleaning it up for the guests. Yeah, cleaning it up for the Super Bowl. So we're going to see some more changes on the strip as we are approaching that. So we're gonna see some things happening down there. Sorry, locals, I know locals hate it because the traffic, the construction.

Speaker 2: 9:31

That's a mindset they need to get on board with this so exciting, oh my gosh.

Speaker 1: 9:36

But come on F1, what they did to that whole area was crazy. Listen, listen.

Speaker 2: 9:41

I mean, the worst I ever had was like a five or 10 minute delay because of F1 and my normal commute, so I was not offended at all. I didn't love those octagon road bridges that they put over, cause those were not smooth to drive on, especially over Flamingo, but all in all I'm still on board. I think they did a great job.

Speaker 1: 10:04

Well, myself, I go to the strip maybe two or three times a year.

Speaker 2: 10:08

I go two or three times a week, if I'm lucky. Yeah, no if that.

Speaker 1: 10:10

So I have like I know my ways, I know my routes, I know where I like to go to avoid people in traffic.

Speaker 2: 10:17

You know I've been on the strip more than three times with you this year, so I don't think your numbers are right. But go ahead, we'll let you believe you never go down there.

Speaker 1: 10:27

Well, anyways, the area you know like going, that area like my avoid traffic area, was all just re-figured around and I couldn't go my routes anymore.

Speaker 2: 10:41

Your favorite routes happened to all be inside of the raceway right, so you were in the middle of it.

Speaker 1: 10:49

Oh my gosh, it was horrible.

Speaker 2: 10:51

Yeah, it was horrible. If you weren't in the actual racetrack area, then the rest of the strip was fine. Yeah, yeah, all my back routes just got totally. I do love the backgrounds, but Sphere is ruining my back route. I like to cut across there like Paradise and get in there. No, no, the Sphere. That place is awesome, but that's the one that's bugging me.

Speaker 1: 11:14

Yeah, I'm finding parking around there. No Jeez.

Speaker 2: 11:18

Yep, so the strip is getting a facelift.

Speaker 1: 11:21

The strip is getting a facelift for the Super Bowl Airbnb's well, I've been hearing that they're cracking down a lot on Airbnb's in general the illegal ones that have been running.

Speaker 1: 11:33

There's so much going on with that. The city is really really and I know, probably because Super Bowl coming in, f1, that was just here they're really cracking down on their regulations. You have to be licensed to operate an Airbnb in Las Vegas. There's a lottery to get a license for that. You have to own the property before you can enter the lottery. So that presents challenges for people that want to purchase just an Airbnb. That's not. It doesn't work that way.

Speaker 2: 12:02

Yeah, they call and say, hey, I want to purchase an Airbnb. Well, that's not how it works. You purchase a property and then, once you have an address, you can apply for the license.

Speaker 1: 12:10

Yeah, so they're cracking down a lot on that and, in addition to that, new Year's parties.

Speaker 2: 12:16

Woo, woo, they're not letting. Yeah, I saw this on the news.

Speaker 1: 12:19

So one of the regulations for Airbnb's in Las Vegas is no party houses. That's right. That means that you cannot throw a big party at the Airbnb that you're renting, no matter how big, no matter how awesome, no matter whatever it is no parties.

Speaker 2: 12:33

Right, 15,000 square feet. If it says it sleeps 10, there's only 10 sleep in there. Yeah, there's no 30 people parting for weekend.

Speaker 1: 12:42

Yeah, and so I don't know how they're using AI for this, but they are using AI to clamp down on those to assure that there's no New Year's party. So if you're renting an Airbnb in Vegas and you're planning on having a party, or if you're an Airbnb owner and you tell them, oh, go ahead and have a party, even though we know it's not allowed. They are going to have a crackdown on that and you may get fined.

Speaker 2: 13:08

And is that AI through the Airbnb site? Is that how they're using it? Do you know?

Speaker 1: 13:13

You know I don't know, I don't know the answer to that, but we can find that out.

Speaker 2: 13:17

Yes, I would like to find that out, because I am sort of obsessed with everything AI. Well, because it moves so quickly, just where it was when I started fiddling with it in February to where it has come now at the end of the year. It is growing so fast and there are so many applications for it that I feel if you don't sort of keep track of it, you're going to be left behind.

Speaker 1: 13:41

I agree with that. I just feel I wish we could just have a break from tech for a minute.

Speaker 2: 13:49

Yeah, no, no, no, no, we're on a fast track because I've seen and heard chatter that platforms like Zillow will start to using AI and there are so many uses for it around so many types of industry that it's difficult that you need to stay ahead of it. I need to stay ahead of it.

Speaker 1: 14:08

Yeah, absolutely. But I just feel like in this day and age, it's like everything has an app. You have all these apps you download, you have all these things you have, and then you have all this unlimited resources of information, but when you need the information, you forget which place to go because there's just too much.

Speaker 2: 14:26

Yeah, okay, I must have 30 accounts. So, I'll be like I have a video editing somewhere. Where is that? And I'm going throughout account and account after trying to find it. That's difficult, I do agree, but it's kind of fun some of the magic that comes out of AI and some of the scary stuff that comes out of AI.

Speaker 1: 14:45

Yeah, well, I hope these tech geniuses will simplify something and make something that's like simple a one stop go to for everything you need, so you're not trying to find everything everywhere. I have, over the last since I've been back and a little bit before I left, I've been asking people what is their biggest real estate question. I've been asking people that I know, people that are in my sphere and people that are just like I meet randomly. I'm like you know, if you were to, you know, like ask a realtor a question, what would it be? So I've got some interesting things. I've created a list. So I'm hoping that this next year, on the podcast, in 2024, we can start doing our shows more Q&A, oh okay, and we're going to ask three more questions, because I think that we have this amazing platform, we have this amazing show that we have, we do.

Speaker 1: 15:41

We're putting out information and even realtors have questions that they would like to ask us.

Speaker 2: 15:47

I'm always surprised at how many realtors listen to the show. I know.

Speaker 1: 15:49

Yeah, I love that. Thanks for the support you guys. Yeah, thank you, I appreciate it. So we're. I think we should transition more into like answering listener questions on our shows and like just getting into like what do people want to know and we can provide answers.

Speaker 2: 16:04

Sounds like a plan.

Speaker 1: 16:05

So I've gathered a lot.

Speaker 2: 16:07

So are we going to hear any of those questions today, or do we have to?

Speaker 1: 16:10

Nope, no, no, no.

Speaker 2: 16:12

If you'd like to like, share and subscribe and come back in the new year.

Speaker 1: 16:14

If you want to know what these questions are 2024, we will be answering listener questions and so if you have listener questions, please.

Speaker 2: 16:22

Yeah, definitely get those to us.

Speaker 1: 16:23

Yeah, email those Vegas Realty Check at gmailcom. And yeah, send us your questions. We'll answer them live on the show. Okay, so the next question is I think it's going to be fun Our topic today.

Speaker 2: 16:36

Yes, yes, I feel like we've done that at 1031. Have we Differred tax exchange?

Speaker 1: 16:43

I don't recall doing it. I know we've talked about it in different times, right, and we've said like, oh, that's complicated, we'll get into that later.

Speaker 2: 16:51

Okay, so neither one of us are qualified intermediaries, but we're going to talk about 1031 exchange. Let's do it, and before we get into that.

Speaker 1: 17:01

We cannot provide tax advice. Yeah, we're not tax accountants. We cannot provide tax advice. We are just going through a summary of what a 1031 exchange is, because some people hear it and they don't understand what it is. And sometimes you hear it or you're a part of it, even if you're not doing one.

Speaker 2: 17:24

So sometimes a buyer is buying your property that you're selling and they're doing a 1031 exchange.

Speaker 1: 17:29

And the buyer or seller that you're buying the property from is doing a 1031 exchange and they send out an addendum, which they have to. That says buyer or seller have to cooperate with the 1031 exchange. And by cooperating with it means that if there's any paperwork needed or anything like that, the 1031 exchange needs to facilitate it that they have to cooperate.

Speaker 2: 17:51

You can't put up a roadblock or stop that exchange for happening.

Speaker 1: 17:54

Yes, absolutely so. It is a disclosure that's required in a contract if either party is doing it or participating in a 1031 exchange.

Speaker 2: 18:02

All right. So for people out there who don't know what a 1031 exchange is, it is a way of deferring your tax due down the line, so transferring from one property to another without having to pay those capital gains. Yes, that's quick and easy of it.

Speaker 1: 18:18

Quick and easy. So the capital gains tax does not go away. So yeah, I was talking to someone in a Christmas party just over the last week and they were saying that they want to. They have a rental property in Vegas and they want to sell that rental property and purchase their forever home in North Carolina. In the meantime, they are going to rent out the property in North Carolina. They just want to secure it before the market changes or whatever, just have it and start paying it off, but they're going to rent it out for several years in the meantime.

Speaker 1: 18:58

Their biggest concern was how much capital gains tax are we going to have to pay when we sell our rental? So I said this is a perfect scenario to review over and see if a 1031 exchange fits your circumstance, because it sounds like it may. Again, not a tax consultant, I can't say that this is exactly the thing that you need to do, but definitely talk about and review this because that might work and that capital gains would just mean that at this tax year you're not going to have to pay the capital gains on that, because if you, there's a certain tax code that says if you are an owner-occupant for the last two out of five years. A single person can go up to 250,000.

Speaker 2: 19:41

Okay, so that is tax code 1034. Okay, Good, Okay, so tax code 1034 is for primary residents and that it again not a tax person. But that's the code.

Speaker 1: 19:51

Okay, and this is as of 2023. So if you're watching this 20 years in the future and this doesn't apply anymore, this is currently 2023.

Speaker 2: 20:00

Then go check the library because we'll probably have new laws and stuff out for new 1031 exchange. Okay but 1034 is for your primary residents and then you don't have to pay those capital gains if you're selling your primary. $250,000 for a single person, $500,000 for a couple.

Speaker 1: 20:16

Right. So if it hasn't been your primary residents in the last two out of five years, then you are then subject to capital gains tax on the sale of the property. So if you do a 1031 exchange which 1031 is a tax code, that's why it's called 1031 exchange If you do a 1031 exchange, you can take that, those proceeds, and you can defer it, which means just put off that tax bill till later by transferring the proceeds into another property.

Speaker 2: 20:43

Right, you're just kicking it down the road, kicking it down the road, kicking it down the road on when those gains are due, unless you hold that property your entire life and put it in into somebody's inheritance and then they get away scot-free and that inheritance tax won't work.

Speaker 1: 20:57

Is that a thing? Really? That's a thing? Okay, I didn't know that. So there is. There's a lot of restrictions to doing a 1031 exchange. Yes, so one of the things is you can't the funds that you receive from the sale of the investment property and it has to be an investment property, by the way, to qualify Right.

Speaker 2: 21:21

Because 1034 covers primary residents.

Speaker 1: 21:23

Right, so the proceeds from that sale have to. You can't take part of them and put the other part into the exchange.

Speaker 2: 21:34

Right, okay. So first let's rewind. In order to do a 1031 exchange, there's a third party involved in the transaction. Yes, okay, they are the servicer of the 1031 exchange. They're called the qualified intermediary, or we call them the QI in our business, and that QI is going to basically handle the transaction and all money goes to the QI and then the QI then sends the money where it needs to be. So you don't get those capital gains. But you're absolutely right. If somebody says I want to take $10,000 in my proceeds and pay off my credit card debt, once you take a dollar out from that QI, you are, then you are disqualified from the 1031 exchange and you are then liable to file your taxes with those gains.

Speaker 1: 22:20

Yes, Absolutely. And then there's another rule 180 days.

Speaker 2: 22:25

Okay, so there's two day rules, right? Yes, the 45 day rule and the 180 day rule.

Speaker 1: 22:30

Yeah, the 45 day rule too Pick a property Right Once you have.

Speaker 2: 22:37

From the close of your property, from the date of sale, you have 45 days to identify property or properties because you can do more than one, there's three actually.

Speaker 2: 22:48

Right, Well, you can do. There's three different rules for the 45-day rule. So the one is the three-property rule, where you can identify three properties, close on one. The closing has to happen. The 180 days. That's where the 180 days come in, Right? So from the date of sale, you have 45 days to identify one, two, three, a thousand, depending upon if you're going to use the 95 percent holding. That's another rule. We're going to go over that in a second. But then you have 180 days to close.

Speaker 1: 23:17

Yes, okay, so that 108 days is non-negotiable.

Speaker 2: 23:21

Nothing's negotiable.

Speaker 1: 23:23

Yeah, we're talking about the IRS here, right you?

Speaker 2: 23:25

get no money early. The 45 days and the 80 days are hard.

Speaker 1: 23:30

Yeah, so if, for instance, you identified three properties and you didn't close on one of those threes, you're disqualified from using the 1031 exchange.

Speaker 2: 23:41

Taxes are due.

Speaker 1: 23:42

I once had a client, and this was during COVID, when the builders were having supply chain issues.

Speaker 2: 23:48

Oh, okay.

Speaker 1: 23:48

We locked in on a 1031 exchange. We have plenty of time with the closing date.

Speaker 2: 23:53

Supply chain ruined that for you.

Speaker 1: 23:54

And supply chain put us in a very tight predicament. It did work out. I begged and pleaded with the builders to expedite us Right. Just finish this one first. Please Pull the mic away from another home. Do something to make sure that we can close because our deadline was. I mean, we were at the last minute of it because if we had not closed on that property, there was about 60,000 in capital gains tax that would have been owed had they not closed on the property that they were deferring into the other investment. So that 180 days is firm Everything's firm.

Speaker 1: 24:30

That is very yeah, your rest don't play.

Speaker 2: 24:33

Yeah, very important that you stick with them. Okay, so under the 45-day rule, yes, you can identify three helms and that's the most common right. There's also the it's sort of dubbed the 200% rule, and that means you can identify an unlimited amount of properties up to 200% of that price. Yes, so you can do that if you want. So if you have like a million dollar home that you sold for two million dollar homes, then you have four million dollars to buy like properties.

Speaker 1: 25:04

Yes, and you can also take the proceeds and buy more than one property, as long as all of the proceeds are used towards it Right, and you can also add your own proceeds into that Right Up to that 200%.

Speaker 2: 25:15

And then there's the 95 cent. I mean 95 cent, 95% rule, and that is for really savvy investors, usually cash, and they're pulling the money out of one property and then they can buy as many properties as they want. There is no limit to that, as long as they actually close on 95% of the properties dedicated. Okay, so that is. It rarely happens, that's. You know, maybe somebody inherited an office building and they sell it off and they want to buy a bunch of single family homes. They can buy as much as they can afford to buy, as long as they purchase 95% of them. Yeah, that they've dedicated.

Speaker 1: 25:55

And speaking of that, the office building going into residential investments, now that there's also a lot of restrictions in between those, it has to be like property.

Speaker 2: 26:07

Okay. So like property is anything real estate though. So I could sell a shopping complex and buy a raw piece of land. I can sell a four plex and buy a single family home. I can sell a single family home and buy a raw piece of land. Those all fall inside like properties, because they fall under real estate.

Speaker 1: 26:25

Okay, yeah, I have seen restrictions on buying, on selling, selling single family and buying multi-family. Oh so there are. There are certain limits that are, that are in there, so that's definitely something to review over with a tax professional.

Speaker 2: 26:43

Yeah, a tax professional. We're just giving you the because it's like and kind, and when I looked it up it was and I've done it where I've sold like a piece of property to buy a home, like a piece of land to buy a home on a 1031 exchange. So it's definitely they call it like or kind in the actual code and so that can be, that can be used, okay. And then there's also something called the reverse exchange, but that was more risky.

Speaker 1: 27:12

Yes, so the reverse exchange is where you start the purchase before initiating the 1031 exchange on the sell Right.

Speaker 2: 27:21

However, you do it backwards yeah.

Speaker 1: 27:23

Because of the timelines and the deadlines. It puts you in a very tight predicament. And the fees on the exchange, because there is a fee to the intermediate. Oh yeah, the fees on the reverse exchange are a little bit higher because of the complication of the situation.

Speaker 2: 27:37

Right and it's a little bit riskier because then you are now having to make sure that somebody buys your property within that hard 180 days. So there's more risk involved with the reverse exchange.

Speaker 1: 27:49

Yeah, buys and closes on that property. Because as a buyer, when you're buying another property, you can guarantee that you can perform. Yeah, and sometimes as a seller, when you're selling a property, you can't always guarantee the buyer's performance. Sometimes things happen so it puts a lot of risk in that situation.

Speaker 2: 28:07

Yeah, and I think that one thing I always recommend is getting a QI. The intermediary, that is not somewhere that you bargain, basement price shop. You're not looking for the best deal when it comes to that QI, you're looking for the most efficient.

Speaker 1: 28:25

Yeah, and definitely a reputable company. Yes, yes, I have a couple that I've used here.

Speaker 2: 28:31

And they don't have to be in the state. I have one out of California that I love. She's amazing. Yeah, I have a couple that I use here that they've done a great job every time, so we go back to them whenever we need it, because that intermediary is going to be important because If they, like I said, if you screw up and take some money or it leaves their desk or anything, then you are liable for that capital gains.

Speaker 1: 28:54

You want that money protected and plus, they're holding your funds, so you want to make sure that you have a, and I don't know, did we talk about capital gains?

Speaker 2: 29:00

It's 15 percent of what? No, that's, that's the amount on your capital gains taxes is 15 percent. Also, in California they have another 9.3 percent to that when you do the exchange, so like if you had a $500,000 home and over the last decade it's now worth a million dollars. You saw it off. That's like $121,500 that is due in those capital gains If you don't do the 1031 exchange.

Speaker 1: 29:24

OK, also, I have had a tax advisor advise that it depends on the tax bracket of your of the year that you're in at that point in time. So that can that can change and that can vary. It's not a hard number on capital gains.

Speaker 2: 29:41

Yeah, but it's about 15 percent. And then, like I said, in California, they have almost another 10 percent. They add on to it.

Speaker 1: 29:47

Yeah, california, yeah, california. Tax tax laws are always, are always, interesting, yeah, and there's a lot of things too. If you have capital gains that can you can use depreciation and things like that, but those are all things that you can talk to a tax advisor about to find out what that amount is.

Speaker 2: 30:04

Yeah, yeah, so great show, thank you for watching it was very quick here with me, yeah welcome back.

Speaker 1: 30:12

I'm so glad to have you. Yeah, so if you guys want to get some more information on anything, 1031, exchange, purchasing your first investment property, any type of real estate. How do people reach you?

Speaker 2: 30:25

Tiana, they can call me, shoot me a tax 702-379-9948. And if they'd prefer to talk to you, they can always reach you via cell phone. What's?

Speaker 1: 30:32

your number, 702-308-2878. If you're watching our show, please like subscribe and share it with your friends. And 2024,. We're going to be having a lot of Q&A, so look forward to that and thank you so much.

Speaker 2: 30:46

All right, have a great week. We'll see you next week Vegas.

Speaker 1: 30:49

Bye.