1031 Exchange
Section 1031 of the U.S. Tax Code allows an investor to sell their real estate and re-invest the money in another piece of property and defer the taxable gain. Basically, it allows you to defer the taxes on capital gains by exchanging rather than selling. This can save you in Federal and State taxes anywhere from 15% to 35% on each dollar of gain realized, depending on the status of tax rates.
Qualifying Types of Property
Non-Qualifying
1031 Exchange Basics
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Contact a Qualified Intermediary (QI) to facilitate the exchange to help to ensure an exchange will be accepted by the IRS. The QI participates on the taxpayer's behalf by buying and selling assets and holding the sales cash.
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Once you sell your investment property, you have 45 days to identify a potential replacement property that is of "like-kind" to the property sold. Fortuntately, all real estate is considered like-kind, so you can trade land for a commercial building, etc.
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Purchase your like-kind property within 180 days from the date of the sale of your investment property.
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You must purchase property that is of equal or greater value than the investment property sold.
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The person or entity that sells must be the same person or entity that buys.
Qualified Intermediaries:
Premier Boulder Properties does not offer investment, tax, financial or legal advice to clients. Individuals who believe they need advice should consult with the appropriate professional(s) licensed in that area of expertise. This section of our website is devoted to providing clients and potential clients with educational information regarding purchasing real estate for investment purposes, and is in no way intended as investment advice.
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