When you’re thinking about selling real estate, there are multiple options to choose from. You can sell your property in a straight-forward sale, pocket the net proceeds, and pay the required capital gains taxes on the sale. Or you can exchange your property in a 1031 transaction, reinvest your net proceeds into a new replacement property, and defer your capital gains tax burden. Section 1031 of the Internal Revenue Code offers a huge opportunity for investors large and small to defer their taxes and keep their money compounding into the future.
Are You Eligible for 1031 Exchange?
Some people may not think they are eligible to conduct a 1031 exchange. The good news is that section 1031 is available to all United States taxpayers. You just need to make sure that your property qualifies for 1031 exchange treatment. 1031 exchanges can only be done with like-kind real property. Personal property is not allowed. Additionally, the real property must be held for investment purposes or for use in your trade.
1031 Exchanges of Real Estate Have Many Benefits
There are numerous benefits to conducting a real estate 1031 exchange. The most obvious benefit is that a 1031 exchange allows you to defer your capital gains taxes on the sale of qualifying real estate so long as you move your sales proceeds into a replacement property of equal or great value, equity, and debt. There are a variety of rules and regulations that need to be followed in order to complete a successful 1031 exchange of real estate. A qualified intermediary can help you navigate the process and answer any questions you might have.
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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