Pacific Northwest Real Estate Investment Market Report: Dec. 2019
Three words that can make or break an investor – capital gains taxes. The taxes from selling your investment property range from 15 to 30 percent, when state and federal taxes are combined. Ouch, there goes your profit margins or money for future investments. So how can you, as an investor, avoid them? The 1031 Exchange.
The 1031 Exchange is a powerful tool, making it a favorite among savvy and successful investment professionals. Let’s dive into the basics of the 1031 Exchange.
What is a 1031 Exchange?
A 1031 exchange gets its name from the Internal Revenue Code, Section 1031, which allows you to avoid paying capital gains taxes on an investment property upon its sale – as long as the profits are reinvested in like-kind properties. Like-kind refers to the nature or character of the investment rather than the form; therefore, any investment property can be exchanged for another type of investment property. In theory, an investor could defer capital gains on investment properties until death, potentially avoiding them altogether.
read more about using 1031 exchangesMarket Activity
Market Activity
Rent growth in Portland metro remains strong at 3.4 percent, with the strongest growth in Washington County at 4.5 percent over the year. The annual rent change for the city of Portland was 3 percent, the strongest being 1 bedroom units at 3.5 percent. Occupancy rates did not see much change over the year, according to a report by Colliers International.
Market Activity
Colliers International states in a report that the Canyon County apartment segment should continue to expand as both Nampa and Treasure Valley continue to grow. Its strong and diverse economy paired with the high quality of life, Treasure Valley is pushing growth over 2% annually. Demand is expected to continue to rise due to the construction of the new Amazon distribution center.
