How Much You Can Save With 1031 Exchanges
FIRST CHOICE for real estate investors living in California, and other high tax rate states, is using the benefits of a 1031 Exchange instead of a traditional sale!
Significant changes made to the Federal and State Tax Codes mean that now a California real estate investor, who sells a $1 million investment property, will likely face the following tax consequences:
- 20% capital gain tax rate (Federal)
- 3.8% Medicare Surcharge (Federal) (buried in the Obamacare legislation)
- 13.3% California Franchise Tax (top California tax rate for individuals)
- 25% Depreciation Recapture (Federal)
Recently, we have seen that California real estate investors, and those in other high tax rate states, have been flocking to the 1031 Exchange strategy. Thus keeping their hard-earned money working for them rather than paying these outrageous taxes.