The Costly 1031 Exchange Mistake You Can’t Afford to Make
A 1031 Exchange can be a powerful way to defer capital gains taxes and reposition your real estate portfolio—but only if it’s executed properly. For Sacramento and California investors, where property values and tax exposure can be significant, one of the most common—and costly—mistakes is failing to plan for the unexpected.
Mistake: No Strategy for Backup Replacement Properties
Too often, investors identify a single replacement property and assume the deal will close smoothly. But what happens if your due diligence uncovers major issues, your financing falls through, or the seller backs out? Without a backup plan, you could face two bad options:
Scrambling to buy a less-than-ideal property under IRS time pressure
Failing to complete the exchange and paying significant capital gains taxes
How to Avoid It
At Legacy Investments & Real Estate, we help clients prepare for every scenario by developing a strategic approach to property selection. Instead of relying on one option, we help you identify multiple high-quality replacement properties from the start. While these strategies are not a guarantee that a problem won’t occur, they can help reduce the chances substantially and give you the flexibility to walk away from a bad deal without jeopardizing your exchange.
Bottom line:
Don’t let a single failed deal derail your 1031 Exchange. With the right team and a well-thought-out strategy, you can move forward with confidence.
Legacy Investments & Real Estate is your partner in passive real estate.
We are passionate in our pursuit to help every investor build their financial legacy by unlocking the power of passive real estate. Through custom strategies aligned to their unique goals and needs, we provide investors with the potential for all the benefits of real estate investing without the headaches of property management.
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There are material risks associated with investing in private placements, Delaware Statutory Trusts (“DSTs”) and real estate securities including the potential loss of the entire investment principal, illiquidity, tenant vacancies impacting income and revenue, general and real estate market conditions, lack of operating history, interest rate risks, competition, including the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and investors should read the PPM carefully before investing paying special attention to the risk section. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Legacy Investments & Real Estate is independent of CIS and CAM.