Section 1031 of the Internal Revenue Code states that, in order to defer your gain on the sale of a qualifying property, you must satisfy a two-part litmus test:
The exchange has to be of real property. Personal property exchanges are no longer allowed.
All real property used in the exchange has to be held for a qualified purpose (for investment or for use in one’s trade or business). Both the relinquished property that’s given up and the replacement property that’s received must be held for this qualified purpose. Property that’s held primarily for personal use generally will not be able to be used in a fully tax-deferred 1031 exchange.
This litmus test should be the first thing you consider when evaluating your property and whether a 1031 exchange is right for you. However, there are many more rules, regulations, and benchmarks that must be adhered to if you want to defer all of your capital gains taxes.
Get Help from a 1031 Intermediary
Get the help you need from a 1031 exchange intermediary by contacting CPEC1031, LLC. Our team of qualified intermediaries have been working in the 1031 exchange industry for more than twenty years. 1031 exchanges are our entire business and we facilitate them with skill and precision. If you’re curious about the benefits offered by section 1031 of the Internal Revenue Code, don’t hesitate to reach out to us today. We can explain the process and help you determine if a like-kind exchange is right for you.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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