Time-delayed IRC Section 1031 tax-deferred exchanges have been favored by a large number of our clients during the past several years. Two of the most interesting ones of late are worth a few remarks.

  • One client sold four rental homes through an exchange for their retirement home in the process of being completed.  The retirement home will be used as a rental for a period of two years, so it qualifies as a "like kind" exchange.  At that time the investor will move into the house.  If they don't sell, for three years, the gain may be tax-free.  In the event of death, it becomes a different structure through new tax law, family trust and inheritance.
  • The other transaction involved exchanging some 18 homes for commercial income property.  All of the homes were tenant-occupied with leases, increasing the challenge.  All of the homes required some work to make them market-ready.  The rentals provided a sizable equity in the exchange as well as previous long-term tax shelter benefits for the owners.

Many of our owners are exchanging, moving up to higher-priced investment homes in the greater Phoenix area.  They are moving out of older homes, we have managed for 10-20 years, using our services to acquire newer homes 5-8 years old.  This has provided them with a means of obtaining additional tax write-off without suffering tax consequences due to sale of investment property.

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DONALD C. DRISCOLL & ASSOCIATES, INC.
9151 EAST CHARTER OAK DRIVE
SCOTTSDALE, AZ 85260-5042
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