1031 exchanges are complex – there are many rules you need to abide by in order to complete a successful exchange and fully defer your capital gains taxes. In this article, we are going to outline some potential traps you might encounter during the course of your 1031 exchange.
Running Out of Time
This is the easiest issue to run afoul of if you’re not careful. 1031 exchanges are bound by strict timelines that cannot be exceeded (except in very rare cases). Specifically, you have only 180 days in total to complete your exchange process after you start it. If you do not finish the process within that timeline, your exchange will fail and you won’t be able to defer your capital gains tax burden.
Only Deferring Some of Your Capital Gains Taxes
In an ideal 1031 exchange, you want to defer 100% of your capital gains taxes. But in order to do that you need to make sure that the replacement property you’re exchanging into is greater in value, equity, and debt compared to your relinquished property. Otherwise you may only be able to defer some of your gains.
Start Your 1031 Exchange Journey Today
Start your 1031 exchange journey today with one of the qualified intermediaries from CPEC1031, LLC. Our company has over two decades of experience working with clients on their like-kind exchanges. We have the knowledge and experience to work with you through every stage of the 1031 exchange process and make sure you are able to defer all of your capital gains tax burden. Reach out to the team at CPEC1031 today to learn more about the benefits of 1031 exchanges and get started with your next like-kind exchange of real estate.
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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