Tax-free. Now that I’ve got your attention, Dave Foster, the founder and 1031 Exchange mastermind behind The 1031 Investor, is a pro when it comes to leveraging tax codes to maximize your investments and sell them tax-free. Whether it’s for investment properties or even your primary residence as a real estate professional (in Dave’s case, a boat for 10 years!), there are ways to legally maximize your profits with every transaction. Listen in to hear Dave’s strategy and investing advice — and learn how it has worked for his family and clients.
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- 01:30 – Introducing Dave, who got into real estate after having his son and wanting to spend more time with family
- 02:10 - He and his wife didn’t want to sacrifice their lives to a career; they got into the last real estate rush before the crash and bought a property in Denver
- 02:55 - His accountant broke the news that, after taxes, he actually didn’t make much profit for all the work; then he learned about the 1031 exchange
- 03:30 - Now, for the past 20 years, he’s been doing them for himself and others
- 05:30 – Dave’s CSIRE story
- 05:45 - He and his wife turned a real estate investing career across four different markets into a sailboat that they lived on for 10 years with all four of their boys
- 06:30 - They used investment money to pay for it and used Section 121 for their primary residence
- 07:00 - On Section 121: If you live at a property that you own for 2 out of 5 years, you can take the first $500,000 in profit tax-free
- 08:00 - You can use that once every two years; it’s not a once-in-a-lifetime opportunity so you could take profit tax-free 8-9 times over a lifetime
- 08:50 - You don’t have to keep your 1031 real estate as investment real estate forever; he and his family combined the 1031 and Section 121 to pocket the profit
- 10:40 – Another CSIRE story
- 10:50 - One of the homes they lived in was a set to a movie called Reservation Road; then they went to Florida
- 13:00 - He has friends that are leveraging the 1031 Exchange and Section 121 to fund their retirement
- 13:55 - 1031 Exchanges require the use of an intermediary and a QI to make sure everything aligns with the law; there are regulatory hoops to pass
- 14:50 - Real estate that qualifies for 1031 Exchange must be intended for use and to hold; Dave had a friend who wanted to sell after a month
- 15:20 - He did intend to hold it, which was in a contract, but the tenant moved out unexpectedly due to a bear that moved in next to her trash can
- 17:25 - He did the 1031 Exchange and everything was fine; the intention was there
- 17:50 – Dave’s piece of real estate investment advice
- 18:00 - You make money when you buy, and you keep your money when you sell; as long as you own the property or sell it into another 1031, you’ll never pay the tax
- 19:00 - When you die, it doesn’t matter how much tax you have built up; your heirs get it as though they paid market value for it so that tax goes away
- 19:22 - Buy it right, sell it right, and enjoy making money for yourself and your heirs
- 19:55 – How to get in contact with Dave: his website and go here for a $50 coupon on your next 1031 Exchange deal
3 Key Points
- Get educated on the 1031 Exchange.
- Research Section 121 and see how you can leverage it!
- Don’t do something just because you think you can get away with it but don’t not do something because you’re afraid of getting questioned about it.