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Had to choose between a 1031 exchange and just selling a small retail strip in Phoenix
The numbers showed a $180k tax hit if I sold, but the only replacement property my broker found was a triple-net lease with a shaky tenant. I went with the sale and took the hit, which felt awful but at least it's cash in hand now. Anyone ever regret going for the exchange just to avoid the tax bill?
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taylor_garcia2mo ago
How long ago was that sale? I've seen a few people get stuck with a bad replacement property and end up wishing they'd just paid the tax. Did your broker explain why the tenant was considered shaky?
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rubywebb2mo ago
Broker just said their credit was trash.
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nancy_green1d ago
That whole "cash in hand" feeling can wear off fast though when you realize what that money could have been doing. The real hidden trap with the exchange is the time pressure - you've got 45 days to identify and 180 to close, and that's when you end up buying something you'd never normally look at twice. Had a friend in Mesa who panic-bought a medical office building just to dodge the tax, and three years later the main tenant went under and the space sat empty for 18 months. Ended up selling at a loss and still paid capital gains on the original sale. Sometimes the tax bill is just the cost of staying flexible.
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