Q: I own a single family home in NJ and am thinking of doing a 1031 exchangeA 1031 Exchange is a means used by investors to defer the payment of federal income taxes. The owner of an investment property will sell that property, deposit the funds with an intermediary company, later buy a replacement like kind property and defer the payment of all federal income taxes. There are many rules that apply to these type of exchanges. for an apartment building in California where I live. Do you think this is smart or should I hang on to a house located in an excellent neighborhood back east?
A: I think it’s very difficult to own rental property 3,000 miles from where you live. There’s no easy way for you to check on how the property is being maintained and what the tenants are doing to it. And not knowing can have disastrous financial consequences if what your tenants are doing is illegal.
I think you’re much better off taking your profit out of this property, executing a 1031 tax-free exchange and buying an apartment building near where you live.
Please consult with a real estateReal Estate is land and anything permanently attached to it, such as buildings and improvements. attorneyA Real Estate Attorney is an attorney who specializes in the purchase and sale of real estate. or 1031 specialist to make sure you complete the transaction in a timely fashion.
Jan. 19, 2009.