Now, we are not tax attorneys (nor do we play one on TV), but we’ve come across a few people who have sold rental property elsewhere in the country and are now looking to us here at Tidewater Custom Modular Homes (Norfolk, VA) to reinvest the profit into rental property here in Hampton Roads. What all these people are finding out is that, with modular home construction, they can build more rental home for less money than traditional home building. They’ll get a better, stronger, more energy efficient structure, but more importantly, they’ll get more rent money.
The process by which to do this is called a “Section 1031 Like Kind Exchange”. Again, you must talk to a tax expert for the details, but simply put, you work the process through an intermediary who handles all the sale of your current and purchase of your future rental property. Because you never actually take receipt of the profit on the sale of your old property (because this profit is directly transferred by the intermediary during the purchase of your new property), federal tax law concludes you have not actually received a cash gain, YET that is. Sometime in the future when you (or your heirs) sell this new rental property, then the federal government will come calling you to pay tax on the gains.
So rather than write a check to Uncle Sam this year, you can reinvest your hard-earned home equity into a new modular home perfectly suited to rent. Small low-cost ranch style such as "The Austin Modular Home" or the “Ashland Modular Home” can immediately put you into positive cash flow on your new custom modular rental home.
We can help you every step of the way. Contact us here at Tidewater Custom Modular Homes anytime!