Avoiding capital gains

[Kevin Tyra]

I am seeking a couple properties and looking for ways to avoid capital gains. The costs of homes are too high to roll over money through 1031 exchange. What other ways are there to avoid the capital gains

[Dave Foster]

@Kevin Tyra, In case you didn't know - You can sell one higher priced asset and use the 1031 to buy multiple smaller assets. That is generally how people avoid the "too expensive house" issue. The other way to avoid is to look to other markets or other asset classes where you can buy more NOI for your dollar. Again, this is what the 1031 allows you to do. A couple other options with the 1031

1. Buy a too expensive rental and use it for investment for a year or two and then move in.  That does not trigger the tax.  And you can sell your current primary residence and take 250/500K of profit tax free and then live in that former investment property.  

2. If your lifestyle is expanding you can sell the investments and start to purchase properties where you like to vacation - ski, beach, lake, whatever.  Rent them and use them.

3. Take the opportunity of non-recourse debt assumption and move into passive Delaware Statutory Trusts.  Debt leaves your balance sheet but tax is still deferred.

4. Move into NNN commercial if the price tag is high. Long term leases, corporate guarantees, No expenses. Value of the property is tied to the leases so inflation, and lease renewal and increases all work together to bounce appreciation.