Non-Tax Reasons to Exchange Volume #2004, Issue #10 

Generally, investors complete tax deferred exchanges to defer the capital gains tax on disposition of their investment properties. However, there are many additional underlying reasons an investor might want to exchange one property for another. Below are some typical non-tax motives to exchange:
  • Exchange from fully depreciated property to a higher value property that can be depreciated
  • Exchange from a property that cannot be refinanced. For example, moving from vacant land to improved property, which can support a new refinance loan, and will thereby give the client the ability to obtain cash after the acquisition of the replacement property.
  • Exchange from a non-income producing raw land to improved property to create a positive cash flow from the rental income
  • Exchange from a property with maximized or minimal cash flow to a higher cash flow property
  • Exchange from a stagnant or slowly appreciating property to a property in an area with faster appreciation
  • Exchange for a property or properties that may be easier to sell in the coming years
  • Exchange from several smaller properties to one large property to consolidate the benefits of ownership and reduce management responsibilities
  • Exchange to a property the client can use in his or her own profession. For example, a doctor may exchange from a rental house to a medical building for his/her practice
  • Exchange from a partial interest in one property to a fee interest in another property

Compliments of

Whitney Graham
Business Development
(916) 806-1468 cellular

NCS Exchange Professionals
5165 Johnson Dr., suite 100
Pleasanton, CA 94588

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Ellen Grace with

(530) 448-3068
Office Direct (530) 582-2455

Fax: (530) 579-3234