Description

Summary

In this episode, host Brandon Bruckman and co-host Julia Fritzlen are joined by Carmine DiFulvio from Security First Exchange to discuss 1031 exchanges in real estate investing. Carmine shares his expertise as a qualified intermediary in the industry. They cover topics such as the importance of working with a regulated qualified intermediary, state regulations on QIs, common mistakes made in 1031 exchanges, and the definition of like-kind property. 

Carmine emphasizes the need for clients to consult with their tax professionals and highlights the benefits of 1031 exchanges in deferring tax liability and retaining wealth. The conversation discusses the history and potential threats to the 1031 exchange, a tax-deferment strategy used in real estate transactions. 

Carmine DiFulvio, shares his experience with lobbying efforts to protect the 1031 exchange from repeal. He highlights the importance of the exchange for the economy, dispels the misconception that it only benefits the wealthy, and emphasizes its role in stimulating transactions and supporting various industries. The conversation also explores title parking exchanges, including reverse exchanges and improvement exchanges, and the timelines and requirements associated with them.

Takeaways

• State regulations on QIs vary, with some states having more stringent requirements than others.
• Common mistakes in 1031 exchanges include failing to contact a QI before the sale closes, misunderstanding the requirement to buy property of equal or greater value, and missing the timeframes for identification and completion of the exchange.
• Clients should consult with their tax professionals and involve the QI as part of their team to avoid potential issues and ensure compliance with IRS regulations. 
• The 1031 exchange has faced repeated attempts at repeal, but lobbying efforts have been successful in preserving it so far.
• The 1031 exchange is not just for the wealthy; it benefits regular people who own investment properties and helps stimulate the economy.
• Title parking exchanges, such as reverse exchanges and improvement exchanges, provide flexibility in real estate transactions.
• Reverse exchanges involve buying a property first and then selling another property within a specific timeframe.
• Improvement exchanges allow for the use of exchange funds to improve a property before transferring ownership.
• The 1031 exchange is a valuable tool for individuals and families looking to preserve wealth, transition assets, and invest in new properties.

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