You have more options than you might think…
With the 1031 Exchange, your cost basis follows you. This applies to:
- Farm / ranch
- Commercial property
- Multi-unit housing
- Residential rentals
- Vacation property (there are limits on how often you can use them)
- Other investments (real estate investment trusts, etc)
You can also pay the tax. It resets your cost basis to the amount net of tax.
- Any new investment (other than land) can now be depreciated.
- Tax free bonds earn interest tax free (state and fed) so depending on income tax bracket, this provides a reasonable return. Depending on the amount of investment, a money manager might make sense to better manage the ups and downs of the value of the portfolio.
An experienced real estate agent like A. Bruce Johnson & Associates can help you evaluate all of these options and weigh the associated risks and benefits.