Defer paying taxes on the sale of your Property
IRS 1031 Exchange
A 1031 exchange is a type of tax-deferrment that comes from Section 1031 of the Internal Revenue Code (IRC) that allows real estate investors to defer capital gains taxes when selling one investment property for another.
Why?
By completing the exchange, the taxpayer can build wealth, save taxes normally due upon the sale, and dispose of investment assets to acquire new ones.
What?
This tax-deferred exchange involves using the proceeds from the sale of the relinquished property to acquire another like-kind property of equal or greater value. Like-kind property refers to a property with the same character or nature or that is part of the same class. The property’s grade or quality does not matter. Most real estate properties will be like-kind to other properties.
How?
While the exchange does not have to be a simultaneous swap, you must meet two time limits or the entire gain will be taxable. First, you have 45 days from the date you sell the relinquished property to identify potential replacement properties and delivered to the seller of the replacement property in a specified written format. The second limit is that the replacement property must be received and the exchange completed no later than 180 days after the sale of the exchanged property or the due date of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier.
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Questions?
We have handled many 1031 Exchange transactions for our team members and clients and welcome the opportunity to guide you through the process.
