COLLEGEVILLE, PA — 1031 CORP. released research this month examining factors that contribute to successful tax-deferred 1031 real estate exchanges and how investors approach the transactions.
The survey included 407 respondents, including 256 professionals such as CPAs, attorneys, real estate agents, financial advisors and title or escrow officers, along with 151 real estate investors.
According to the results, 74 percent of investors who complete their first 1031 exchange go on to conduct additional exchanges.
Most repeat investors complete between three and five exchanges over time, the company said.
The research found that property values, cited by 68 percent of investors, were the most influential factor in real estate decisions.
Cash flow potential was cited by 63 percent of respondents, followed by interest rates at 48 percent.
“Most advisors frame 1031 exchanges for tax deferral,” said Margo McDonnell, president and chief executive officer of 1031 CORP.
McDonnell said investors who complete an initial exchange often gain confidence in the process and continue using the strategy.
The survey also found that 83 percent of professionals said interest rates are influencing how clients approach real estate investments.
The company said starting discussions about 1031 exchanges earlier in the property sale process can provide investors with more time to identify replacement properties.
The research also identified several practices that may support successful exchanges, including addressing replacement property searches earlier and coordinating communication among advisors involved in the transaction.
1031 CORP. said it plans to share additional guidance based on the research through webinars and educational materials for investors and professional advisors.
The company, founded in 1991, facilitates tax-deferred property exchanges under Section 1031 of the Internal Revenue Code for real estate investors and their advisors.
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.