When delving into a 1031 exchange, there are crucial factors to keep in mind to ensure a smooth transaction. Here are some key points to be vigilant about.
Exchange Fees
In a standard "forward type" exchange, expect exchange fees of approximately $950 for the relinquished property closing and $350 for the replacement property closing. These fees will be deducted from the proceeds at the time of closing, so clients won't have to pay out of pocket.
Commissions and Closing Costs
Qualified exchange expenses like broker's commissions, title insurance fees, escrow fees, appraisal fees, transfer taxes, and professional service fees can generally all be paid from the exchange proceeds without impacting the exchange's qualification.
Additional Considerations
Selling to a related party requires careful consideration.
Lending money to the buyer of the relinquished property can impact the exchange.
Ensuring that the value of the replacement property equals or exceeds the amount realized from the relinquished property is crucial if you want to defer 100% of the gains.
By staying aware of these factors and working closely with a qualified intermediary, you can navigate a 1031 exchange successfully. Your feedback and questions are always welcome to ensure a seamless process.
Like-Kind Exchanges Can Save You Money in Capital Gains Taxes
The biggest benefit of conducting a like-kind exchange is that you are able to defer capital gains taxes on the sale of investment real estate. However, in order to get that tax-deferral you need to meet certain benchmarks and timelines. A qualified intermediary is your go-to resource for all things 1031 exchange. Having an intermediary on your team will help solidify the success of your 1031 exchange transaction. Contact CPEC1031, LLC today for help 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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