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The benefits of the 1031 Exchange practice are attractive! But are there the best options for every investor? When is it right to pay your capital gain taxes? And when to consider re-investing in other nnn properties for sale to defer paying those taxes? Let us discuss some facts to help you decide.
Intro - nnn Properties & 1031 Exchange Practice
For those who still don't understand what this is all about, this section of the article is for you. Also, it is a good refreshment for your mind if you are familiar with the practice and its related information.
We earn capital gain when we sell a property for a profit. And we must pay taxes for that gain. At some point, we must pay these amounts. But the 1031 Exchange practice allows us to defer that payment if we re-invest in purchasing nnn properties. But everything must stay within several terms. And some of these terms are in the following section of the pros and cons of re-investing in nnn properties to defer capital gain taxes payments.
Pros of 1031 Exchange and nnn Properties for Sale
There are advantages related to the triple net lease agreements and benefits for reinvesting in these properties. The two matters are related, but they are not the same. So, keep that in mind while making your decision.
nnn Lease Agreements Advantages
- The lessor will forget about the responsibility of the building expenses. The lessee will agree to pay for insurance, the building's shared areas expenses, and property taxes.
- The lessor will guarantee to rent their properties for more periods.
- nnn leases will add value to your property. And that's because only brands, banks, and bigger businesses will agree to nnn leases.
The 1031 Exchange practice Advantages
- If you earn from selling your nnn property, you can defer paying capital gain taxes by reinvesting in another nnn property. The amount will not disappear, and you will have to pay it one day. But what is the problem in using the cash flow in growth instead?!
- The process is complex, and the time is usually tight, but it is a rewarding approach to growing your wealth. It is possible and happens with many investors who get reliable help and nnn property services from reputable nnn property finders, such as NetLease World.
Cons of 1031 Exchange and nnn Properties for Sale
It is not easy to think of the disadvantages of deferring tax payments. However, they are all centralized around the difficulty of meeting the terms and conditions of the 1031 Exchange Practice. And here are some ideas:
- The time ticks. You will have only 180 days from the sale of your first property to the day of purchasing the new one.
- The similarity is a must. You must re-invest in a similar property. This "Similarity" is a simple term you read in an article blog. There are details and specifications for the matter mentioned in the 1031 practice.
- You need to hire an agency. Individuals will find difficulties in finding, listing, or purchasing nnn properties in the USA. It is a competitive market, and an individual will have no chance if compared to professional finders with tools and experiences.
Conclusion - Should You Take the Risk?
That's for you to decide! Now, you have enough information to build your decision. You understand the concept of the 1031 Exchange practice. You are familiar with and aware of the pros and cons of the practice and the nnn lease agreements. Put everything together in your story, and make your call!
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