Can You Use a 1031 Exchange Out-of-State?

Abstract

Purchasing like-kind property in another state is commonly known as a state-to-state 1031 exchange. Why You Should Invest With A 1031 Exchange Out-of-State Since a 1031 exchange is accepted federally, there are few limitations to purchasing property in a state outside of where you reside. Improve cash flow Capital gains taxes are deferred when using a 1031 exchange to purchase property, meaning a more significant percentage of the proceeds can go towards your new investment. Diversify your portfolio Get exposure to new markets and diversify your investment portfolio by purchasing property in markets that are up and coming. Getting a head start in an up-and-coming market could lead to more significant returns down the road. As mentioned above, using a 1031 exchange will allow you to defer capital gain taxes when selling a property in a high-tax seller's market. A local real estate broker Qualified IntermediaryCRE attorneyTax specialistProperty manager A local real estate broker Qualified Intermediary CRE attorney Tax specialist Property manager Do your research: Before you begin searching for a property, you should thoroughly comprehend the process of a 1031 exchange and its rules. With more people moving to the area, more rental properties are needed, leaving ample room for investors to rent out properties quickly and easily.