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1031 Exchange: Mililani – Arizona & Florida

1031 Exchange:  Mililani – Arizona & Florida

This article is a brief case study describing how and why Stott Real Estate, Inc. recently helped Stott Property Management, LLC clients successfully complete a 1031 Exchange.  The client hired Stott Property Management, LLC roughly four years ago to manage a Mililani single-family home that they were renting out to a long-term tenant.  The previous property management company managed thousands of accounts and experienced a lot of employee turnover.  The clients’ previous property manager resigned, the clients were not notified of the change, and their phone calls and emails were not returned.  The townhouse was in good shape and quickly rented once the interior received new paint.


The clients sold the Mililani townhouse and used the proceeds to buy a house in Jacksonville, FL and Tucson, AZ.  They decided to conduct the 1031 exchange for two reasons:


  • The combined rent was about 45% higher than what they received for the Mililani townhouse (50% higher when Hawaii General Excise Tax is factored in).
  • There is no capital gains tax in Florida and the capital gains rate is 4.5% in Arizona compared to 7.25% in Hawaii.


The clients plan on renting out the houses for at least three years.  They chose the locations because they are near military facilities and considered the rental markets to be ideal.

Do you have equity in an Oahu second home or investment property that no longer serves its original purpose?  Please call or email if you would like to discuss how we can help you invest your Oahu equity into an investment property in another state that better achieves your real estate goals.

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