1031 exchanges and 1033 exchanges both allow taxpayers to defer their capital gains taxes when selling property, but there are some notable differences between the two. In this article, we are going to explain the similarities and differences between the 1031 exchange and the 1033 exchange.
1031 Exchange
The 1031 exchange allows you to defer your capital gains tax on the sale of real estate so long as the property involved is used for investment purposes or in your trade or business. A qualified intermediary is required for this type of exchange, and you must complete your exchange within the allotted 180 day time period. All of your net proceeds from the sale of the relinquished property must be reinvested into the new replacement property.
1033 Exchange
1033 exchanges are only applicable when it comes to property that has been involuntarily converted or exchanged. In other words, section 1033 deals with property that has been condemned, destroyed, or stolen. Unlike the 1031 exchange, a 1033 exchange does not require a qualified intermediary. Instead, the taxpayer simply reports the exchange on Form 4797. There are also no time restrictions for identifying replacement property. However, the net proceeds still must be reinvested in a replacement property of equal or greater value.
Minneapolis Qualified Intermediaries
The qualified intermediaries at CPEC1031, LLC have more than two decades worth of experience facilitating 1031 exchanges of real estate. Our intermediaries are well versed in section 1031 of the Internal Revenue Code and can help guide you through the 1031 exchange process. Let us assist you and ensure that your like-kind exchange is flawless. Give us a call today to set up a time to chat with one of our intermediaries about your exchange. You can reach us at our main office in downtown Minneapolis.
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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