One of the benefits of section 1031 of the Internal Revenue Code is that it can be used for a variety of different purposes. In this article, we are going to discuss a few of the common reasons why taxpayers decide to conduct 1031 exchanges with their like-kind real estate.
Lateral 1031 Exchanges
Some people do lateral 1031 exchanges simply to move from one geographical area to another. If you are nearing retirement and you’d like to sell your property in one state and move to another state in which you plan to retire, this is a great option to do that. In a lateral 1031 exchange, you’re not necessarily going up in terms of your value, equity, and debt – but you’re still able to defer your capital gains taxes by exchanging into a like-kind property of equal value, equity, and debt.
Levering Up with a 1031 Exchange
Other taxpayers want to stretch their equity as far as possible and lever up into a bigger and better property. This is the real power of the 1031 exchange as a tax-deferral tool. Over time you can continue to exchange into bigger and better property and compound your wealth into the future.
Like-Kind Exchanges of Qualifying Real Estate
Under section 1031 of the Internal Revenue Code, you can exchange qualifying investment real estate for other like-kind real estate and defer your capital gains taxes in the process. This is a tried-and-true method of tax deferral, with a long history of use among investors big and small. Learn more about the many benefits of the 1031 exchange by contacting the 1031 intermediaries at CPEC1031, LLC. Our team of 1031 exchange accommodators can help guide you through the process of your like-kind exchange form identification to closing.
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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