1031 Exchanges in Nevada
Real property investors are allowed under IRS Code 1031 to defer their capital gain tax if they exchange investment property of a like kind. Investors can trade an existing property for a different property without having to pay taxes on their gain. Thus, tax liability is deferred forward and becomes due only when the acquired property is sold.
Prior to the "recession of 2008" property in Las Vegas was increasing in value every year, and it made for an excellent investment. Since the economic downturn, it has become nearly impossible to sell real estate in many parts of Las Vegas. The Strip is always the exception, even in times of exceptional foreclosure Strip properties have fared well. Land located on the Strip increased in value during 2008 based on some recent reliable sales information.
1031 Exchanges have also been exceptionally popular in Nevada due to the fact that parties who acquire land, apartments or other investments in the state benefit from their ownership. Since Las Vegas is usually the #1 or #2 travel destination in the U.S., being able to visit Las Vegas as a business expense is a real plus. It is entirely legitimate to travel to Las Vegas to manage investment real estate owned here. The fact that some of the best restaurants, shows, gaming and night life in the world is here is just a great ancillary plus.
Most individuals realize that Las Vegas will bounce back quickly when the general economy turns. We are currently seeing unemployment headed for 10%, and gaming is suffering from the effects of lost discretionary income. While the gaming industry saw its share of losses in 2008, it will likely see an even larger slowdown in 2009. When people were choosing where to relocate in the past, when they could make that choice, Las Vegas was one of the top in-migration areas in the Country. While most individual's currently don't have a choice about relocation, and the lack of real estate sales have dampened moves to the southwest, migration to Las Vegas will eventually resume.
Land in Las Vegas is held mostly by the government, and there is a relatively small individual ownership percentage of total land area. When markets are flat, it appears that there is no demand. When demand returns, which it always does in time, the minor individual ownership plays an important part in the supply / demand equation.
Exchanging your real property investment for an investment in property located in Las Vegas may provide you with a chance to combine business with some pleasure, and the long-term prospects for success are better here than in many other areas.
Copyright 2008, Glenn Rigdon, Horizon Village Realty
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