Did you know that summer is the busiest season in real estate? According to The National Association of Realtors, “an average of 2.1 million purchase transactions take place during this period.”
Northern Bank's Michele Fitzpatrick was recently invited to present a CE credit class for Cotter Law and the WFG Real Estate School, where the hot real estate market was the focal point of discussion. She was joined by Attorney Elizabeth Cotter of Cotter Law and Lisa Stills from WFG National Title Insurance Company.
In general, 1031 Tax Exchange allows a property seller to shift funds from the sold property to a new investment and defer the obligation to pay capital gains taxes. Attorney Cotter discussed the importance of Title insurance, especially when executing a 1031 exchange. Title insurance protects the policyholder from alleged title defects by third parties that were most likely unknown to the policyholder at the time that the property was purchased.
Examples of title defects include fraud, lost or forged deeds, and unpaid contractors. Attorney Cotter explained that in the instance of a 1031 exchange, having title insurance can help alleviate any delays in the time sensitive transaction.
Michele discussed the option of completing a reverse 1031 exchange. The ability to purchase a replacement property prior to selling the relinquished property is a worthwhile solution for many investors in this market. In a reverse 1031 exchange, the investor has 45 days from the date of purchase to identify the property to be sold in order to complete the exchange and 180 days from the date of purchase to complete the transaction.
Another major topic of discussion was how 1031 exchanges benefit the economy and aid in the recovery from the pandemic. In a 1031 transaction, many parties benefit: attorneys, banks, realtors, appraisers, insurance agents, even city and state governments. Not to mention that “for every 1031 Exchange, there is a minimum of two transactions, which doubles the number of fees and jobs.”
1031 exchanges bring forth a myriad of benefits for investors, the real estate market, and the economy in general. If you have questions about how to make a 1031 exchange work for you, please contact Michele Fitzpatrick at email@example.com.