1031 Exchanges The Legal Way To Defer Investment Property Capital Gains Tax


1031 Exchanges The Legal Way To Defer Investment Property Capital Gains
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1031 Exchanges - the​ Legal Way to​ Defer Investment Property Capital Gains Tax
With the​ booming property prices of​ recent years,​ more and more people are finding themselves facing a​ large tax bill when they come to​ sell their investment properties .​
However,​ did you​ realize that there is​ a​ perfectly legal way of​ deferring payment of​ such taxes by utilizing the​ advantageous 1031 tax code that was introduced by the​ IRS in​ the​ early 1990s?

A 1031 exchange is​ a​ way of​ deferring payment of​ capital gains tax on​ certain types of​ real estate .​
Normally when an​ investment or​ business property is​ sold,​ capital gains tax has to​ be paid .​
However,​ with 1031 exchanges,​ by replacing the​ old property with a​ like-kind property,​ within set time limits,​ payment of​ capital gains tax can be avoided.
Under the​ 1031 exchange real estate rules,​ a​ seller must have held a​ property for at​ least one year and a​ day for it​ to​ qualify .​
Another requirement is​ that both old (relinquished) and new (replacement) 1031 exchange properties must be of​ a​ like-kind - either rental properties,​ vacant land,​ trade,​ business or​ investment properties.
1031 exchanges must be completed within strict time limits .​
There is​ a​ 45 day Identification Period from the​ transfer of​ the​ old property,​ in​ which a​ replacement property must be identified .​
the​ 1031 exchange rules stipulate that the​ exchange must be completed within the​ 180 day Exchange Period.
The 1031 exchange real estate issues are complex,​ so it​ is​ imperative to​ seek professional advice from a​ tax advisor or​ qualified intermediary who can assess your specific circumstances and explain other issues such as​ the​ reverse 1031 exchange or​ TiC rules .​
With careful financial planning,​ you​ can reinvest your capital gains in​ future real estate investments,​ thereby allowing you​ to​ leverage your money more efficiently and to​ reap greater financial benefits.



1031 Exchanges The Legal Way To Defer Investment Property Capital Gains Tax



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