Chris Larsen explains how 1031 exchanges let real estate investors defer capital gains tax and depreciation recapture, cutting the tax drag that eats into returns. The strategy works with 100% bonus depreciation and pushes taxes to a later sale instead of now.
1031 exchange can be fantastic to grow your wealth without having tax drag in between selling your property. So it's if you're selling every call it three years and you have a huge tax bill in between, that's really dragging, putting a drag on your returns. And kind of you're compounding your wealth at a much lower rate. As if this taxes. So 1031 exchange allows you to defer all of your capital gains tax. It also defers capital depreciation recapture. So that's especially relevant right now with 100% bonus depreciation. And I'm sure people listening to this call would love to fully utilize 100% bonus depreciation. And then, you know, when you sell, that's kind of another thing that you have to think about. But if you're 10:30 exchanging, you're also deferring your recapture of that depreciation.
