Newman-Dailey Real Estate Team Highlights 1031 Exchange For Investors

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The tax deferral program has saved real estate investors billions over the last five years

Investors have used 1031 exchange to reinvest in condos in Jade East in Destin, FL

The federal tax expenditures report estimates the tax cost of 1031 exchange deferrals over the next five years (2011 – 2015) at $15.2 billion.

The real estate team at Newman-Dailey Resort Properties is counseling clients on the benefits of a 1031 exchange. A 1031 exchange is an income tax deferral strategy that allows a real estate investor to sell rental or investment property and defer the payment of the resulting income taxes by reinvesting in replacement rental or investment property.

The Joint Committee on Taxation (JCT), a joint committee of members of the US Senate and Congress, publishes estimates of federal tax expenditures. The January 2012 report estimates the tax cost of 1031 exchange deferrals over the next five years (2011 – 2015) at $15.2 billion.

"We're finding that 1031 exchange is an underutilized product," said Realtor® Mark A. DeSalvo with Newman-Dailey Resort Properties. "Many sellers are simply unaware of this federal IRS program."

As the market recovers, more properties are selling and investors experiencing increased gains. According to the Florida Association of Realtors, the statewide median sale price for existing single-family homes was up 7.8 percent from July 2011. Along the Emerald Coast, residential home sales are up 56% in Okaloosa County and up 38% in Walton County during the month of July.

"The rebounding market has created heightened interest in rental properties in the Destin area," continued DeSalvo. "For investors looking to make a switch to a gulf coast investment property in preparation for retirement, the 1031 exchange is a great option."

The primary 1031 exchange rules require that the same taxpayer who sells property buys the subsequent property. The investor must identify the replacement property within 45 calendar days post closing of the first property, and purchase of the replacement property within 180 calendar days. In addition, the price of the replacement property must be equal to or greater than the old or relinquished property, and the replacement property must be held as a business investment.

"The reasons investors are selling and buying vary greatly, and often involve a life change," said Certified Exchange Specialist© Andy Gustafson with Atlas 1031 Exchange. "An investor may be moving and want to remain close to his investment; An investor may want to consolidate investments for easier management; An investor may want to sell a property in an stagnant location to purchase a property in the path of progress. The reasons vary and our goal is to make investors aware of this option before the transaction instead of learning about it after the fact."

In an effort to better serve clients, the real estate team at Newman-Dailey recently participated in an educational session to enhance their knowledge of the 1031 exchange in order to better educate clients.

"We recently helped a client in New Orleans who renovated a condo complex in Louisiana and wanted to purchase property in Destin," said DeSalvo. "We've been able to use the 1031 Exchange to defer thousands of dollars in capital gains tax on the sales of the renovated condos since the funds were reinvested in units along the Emerald Coast."


About Newman-Dailey Resort Properties, Inc.
Newman-Dailey Resort Properties is a locally-owned business, specializing in resort rentals, sales and management in Destin and South Walton for more than 27 years. Recognized for excellence, integrity and professionalism, Newman-Dailey consistently receives "excellent" rankings on TripAdvisor and recognition among readers as top choice for "Best of Emerald Coast" and "BESTIN DESTIN" by Emerald Coast and Destin Magazines. The Real Estate Division is consistently listed among the top 10 percent of real estate companies along the Emerald Coast for sales. For more sales or rental information, call 850.837.1071, or visit online at or

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