1031 Example Savings Scenario 1:

Tim decides to sell a duplex that he has owned as an investment property for 10 years originally purchased for the amount of $70,000, and is now worth $750,000. His real estate broker has recommended that he engage Liberty 1031 to act as his Qualified Intermediary in a tax-deferred exchange, thereby deferring payment of capital gains taxes. The real estate broker finds Tim an office building valued at $3,000,000 for his replacement property. Tim is successful in the exchange process and as a result, does not have to pay capital gains taxes in the amount of $136,000. ($750,000 less original purchase price of $70,000 equals $680,000 profit. Capital gains tax is 20% times $680,000 equals $136,000.) He is able to purchase the office building leveraging the net proceeds from his duplex. Tim was able to purchase a property worth $544,000 more using the 1031 exchange.**

1031 Example Savings Scenario 2:

Isadora Investor owns a 10 unit apartment building, which she bought 4.5 years ago for $150,000. She discussed her situation with her Financial Advisor, who suggested she implement a 1031 Tax Deferred Exchange for the acquisition of a different investment property. Isadora has found a Buyer to purchase her apartment building for $900,000. Instead of selling the building directly, Isadora consummates a 1031 tax-deferred exchange. As a result, she defers capital gains tax of $112,500 on her $750,000 profit ($900,000 less original price of $150,000 equals profit of $700,000 times 20% current federal capital gains rate equals $140,000 capital gains tax). Isadora uses Liberty 1031 as her Qualified Intermediary and closes on 60 acres of unimproved land at the purchase price of $3,400,000. No capital gains tax is then due as Isadora has completed a valid tax-deferred exchange exchanging one investment property for another. Isadora was able to purchase a property worth $560,000 more using the 1031 exchange.**