1031 Tax Deferral Strategies for Real Property
In an effort to keep our clients and prospective clients aware of the latest trends in real estate investment, we would like to take this opportunity to highlight advantages of 1031 exchanges. When selling business or investment property, you can defer capital gains taxes, depreciation recapture, and possibly state taxes, through a simple 1031 exchange.
I.R.S. Code Section 1031 allows you to reinvest the proceeds from the sale of property held for investment or business purposes into another investment or business property, and defer the tax that would otherwise be due on the initial sale.
A 1031 tax deferred exchange can be accomplished in three steps: (1) sale of property currently held, (2) identification of potential replacement properties within 45 days of the initial sale, and (3) purchase of the replacement property within 180 days of the initial sale. Proper use of the 1031 exchange process can save you thousands of dollars in taxes, and provide more leverage for a better investment.
In order to qualify for the safe harbor protections of a 1031 exchange, your sale proceeds must be held by a Qualified Intermediary. More importantly, a Qualified Intermediary must be contacted before your sale to provide the requested documentation, and set the exchange in motion.
We trust that you have found this brief introduction to 1031 exchange helpful. If you would like further professional advice or assistance, please do not hesitate to visit our website www.iexchanged.com. If you would like to start a 1031 exchange, you can contact our preferred Qualified Intermediary, Bayview Financial Exchange Services, LLC directly at (866) 903-1031.
We look forward to providing you the best in professional services towards your continued growth and success.