1031 Exchange, named after the IRS code, allows you to sell investment
real estate and replace it with other investment real estate without creating
a taxable event.
Many investors don't realize that taxation on the sale of investment
property does not have the same tax advantages enjoyed when selling their
principal residence. Profits are often substantially affected by tax consequences.
With a 1031 Exchange, you can defer payment of the tax normally due on
the sale of your property that has a taxable gain.
There are many benefits to performing an exchange instead of a sale and
new purchase. It can make more funds available for the new purchase by
deferring any tax payments that would have been due. It can also help
you with your investment income. By allowing you to sell investment properties
that aren't giving enough return and use the non-taxed gain to purchase
another property that produces more cash flow, you can greatly increase
To qualify for a 1031 Exchange, you must trade real estate that is held
for business or investment purposes for other like investment property.
1031 Exchanges can not be used in the sale of your primary residence or
To qualify, you must use a Qualified Intermediary, who in turn buys the
next property you have chosen. You are not required to exchange all of
your cash from the sale of the first property into the purchase of the
second. However, if you take proceeds from the first sale, each dollar
taken is subject to capital gains tax. To avoid the tax, you must rollover
the entire gain into the new property. You may also exchange one property
for several others or vice versa. It does not have to be one for one.
For a copy of the 1031 Exchange Rules and Guidelines, give us a call
at 858.459.9109 or email us: firstname.lastname@example.org.
We recommend that you consult your personal accountant for specific advice.
For more information, click here, or the box below to visit The 1031 Experts