Zero Cash Flow
Zero Cash Flow Nationwide
Are you in your 1031 Exchange 45-day identification period? If concerned that you might not be able to find like-kind replacement properties to satisfy your exchange and successfully defer paying capital gain taxes, we have your qualifying replacement properties.
1. Your sale results in all cash (or close to all cash). Your sold property has no mortgages (or very little total morgages). We will show you how to not only satisfy your IRS exchange requirements, but also show you how to pull out the majority of your cash (tax-free!) shortly after closing on our unique replacement properties. With your cash, you will then have the freedom to buy new properties with full negotiating power and free from any IRS deadlines. In addition, your new properties come with brand new, full tax-basis depreciation schedules!
2. Your sale results in very little cash (high total mortgages). We have rare replacement properties that will satisfy your IRS exchange requirements.
The short 1031 Exchange 45-day deadline restricts timeframes, negotiating power and often result in having to settle for unsatisfactory replacement properties. We are the nations #1 trusted source for high quality, investment-grade properties with rare, assumable, non-recourse mortgages ready to go. Our properties are confidential, off-market and will never be found anywhere online. Please contact us to design a unique portfolio of properties to satisfy your 1031 Exchange or 1033 Exchange. 
We are currently marketing a number of single tenant, bond net leased zero cash flow investment
properties which you may want to be aware of. These properties can be very valuable to those in a
1031 or 1033 Tax-Deferred Exchange. These properties are fully leveraged and generate zero cash
flow over the entire primary term of the lease.
These zero cash flow properties tend to move quickly. Available zero cash flow properties are
subject to prior sale or withdrawal at any time.
Zero Cash Flows are popular choices for estate planning, trusts and pensions who enjoy the income
generated after the debt is paid off. This remainder income is then left to heirs. Zero cash flow
tax planning benefits include satisfying exchange requirements with very little equity plus
interest and depreciation deductions.
Recent examples include:
(1) Sold a zero cash flow store to buyer with $10 million in cash and $12 million in debt to
replace from a
prrior 1031 sale. The buyer closed with the full $10 million dollars and
subsequently refinanced the property to pull out $8 million. In the end, the Buyer sheltered gain
on a $22 million sale, pulled out $8
million cash tax deferred, and owns the $22 million store on a bond net
lease for $2.2 million in cash.
(2) Large Apartment and Commercial Office Building owner accepted an offer and closed on one of
their properties, a $65 million Commercial Office Building. With the 45-day clock ticking down,
they were not finding any suitable replacement properties and were in a serious tax bind. Of the
$65 million, $45 million was cash and $20 million was debt. The buyer closed on a $65 million zero
cash flow portfolio and within 2-3 weeks, pulled out $40 million in cash. With $40 million in hand
tax-free, they could now take their time in negotiating a purchase of a replacement property
without the gun to their head. Alternatively, they could place this cash in whatever other
investment they want, even the stock market if they want. In the mean time, they not only
sheltered their gain, but immediately enjoyed lots of tax benefits in the way of interest and
depreciation expense on the zero cash flow portfolio.
What is a 1031 exchange & why should I do one? We specialize
in assisting tax exchange buyers locate appropriate replacement
properties and complete a
tax deferred exchange. Recently, close to $1 Billion in
sales of properties to tax oriented Section 1031 and 1033 purchasers have been completed.
Tax Issues: Any sale of business or investment property is a potentially
taxable event, and the
two areas of tax liability that can be triggered are capital gains and
the recapture of
depreciation. The Internal Revenue Code Section 1031 allows for 100%
deferment of
capital gains tax and depreciation recapture if the property is exchanged
for like-kind
property.
Determining Gain or Loss: The realized gain from the sale or
other
disposition of property is the excess amount realized over the adjusted
basis. The adjusted
basis is the initial basis plus any capital improvements less depreciation. Example: JP
Development builds a shopping center for a total cost of $10.0 million
(the initial basis) comprised of $3.0 million in equity and $7.0 million in debt. Some years
later JP
Development sells the center for $14.0 million. Assuming 20% depreciation
and no
capital improvements, the adjusted basis of sale is $8 million resulting
in a $6 million
taxable gain. At the current 28% capital gains tax rate, the tax
liability on this gain would
be $1.68 million.
Replacement Property: The property sold is referred to as the
"Relinquished Property"
and the newly acquired exchange is called the "Replacement Property".
JP Development
would need to find a Replacement Property of $14.0 million, the total
sales price, or
greater. The property would need to be purchased with a minimum of $7.0
million in
equity (the equity created from the sale). Currently, like-kind real
property by definition is
any real property, other than your domicile, so JP Development could
exchange the
shopping center for a hotel, office building, industrial warehouse,
etc.
Net-Leased Properties: Net-leased properties offer the security and
limited
responsibility/management that are ideal for most 1031 Exchange Buyers.
The lease
structure allows for passive management with a consistent income stream
from a credit
tenant.
Timing: Exchange buyers have 45 days following the close of
their sale to
identify up to three potential Replacement Properties. The acquisition
of one of those
properties must occur no later than 180 days after the original sale.
The money from the
sale is typically held by an accommodator or title company which
specializes in 1031
Exchanges.