Ep 65: Unpacking 1031 Exchanges with Michael Brady
If you’ve been in the syndication game for any amount of time, you will have heard about 1031 exchanges. However, as with most strategies, there is a massive amount of misinformation. Today's guest, Michael Brady, Executive Vice-President of Madison 1031, is here to debunk these myths and share some other insights into these transfers. As a qualified intermediary for 1031 exchanges, Michael has helped his clients defer over a billion dollars in taxes. We kick off the show by launching straight into the most widely-held 1031 exchange misconceptions. These include the elimination of taxes, reinvesting profits, and capital gains. We then dive into technical specifics of 1031s, such as the two sets of deadlines and the requirements of getting all your cashback. Next up, we take a look at reverse 1031s, how they’re different from regular 1031s, and why they only work well on larger deals. We wrap the show up with some of the changes that have been proposed for 1031s and the ensuing negative impacts. Be sure to tune in today!
Key Points From This Episode:
Learn about Michael’s background, his real estate experience, and what he’s involved in.
Some of the biggest misconceptions around 1031s that Michael commonly sees.
Find out how debt influences the kinds of deals you can do a 1031 exchange into.
Michael’s advice on how long to wait to do a refi and why his view is more conservative.
The purpose of using all the cash from a 1031 exchange in the next deal.
An overview of the two sets of time constraints that come with a 1031 exchange.
How the pandemic has affected 1031 exchange deadlines.
What it takes to get your money back with a 1031 and the problems Michael sees.
Don’t rush buying a property if you can only find bad ones.
The ideal dollar amount for tax savings with a 1031 exchange.
Learn more about a reverse 1031 exchange and why it’s hard to do it with small deals.
Some of the 1031 exchange changes that could be on the horizon and influencing factors.
The negative effects of getting rid of or altering of 1031 exchanges.
Valuable educational materials and resources to learn more about 1031 exchanges.
“Somebody doing a 1031 exchange really is just kicking the tax can down the road.” — Michael Brady [0:04:10]
“You’re much better off paying taxes than you are buying bad real estate.” — Michael Brady [0:24:06]
“We don’t really make a lot of things in this country. We don’t have a lot of industry per se. A lot of what we have, the real estate portion of the economy, is a major driver. It’s real estate and finance, especially where we are, in the New York region, that’s our primary bread and butter. ” — Michael Brady [0:37:13]
Links Mentioned in Today’s Episode:
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