In this article, we are going to get back to basics and explain what exactly the 1031 exchange of real estate is and how it can be beneficial to taxpayers investing in real estate.
What is a 1031 Exchange?
A 1031 exchange is a code section in the Internal Revenue Code that allows people to defer their gains on their appreciated real estate that’s been held for investment or business purposes when they do an exchange into like-kind property that’s also held for investment or business purposes. What that means you are realizing but not recognizing the gain on your sale. In other words, the gain is not currently taxable.
Typically, when you sell an investment property in a standard sale, you will likely have a taxable gain on that sale because you used it for the purposes of generating income. But if you exchange out of your property and into like-kind replacement property, you can defer that capital gains tax burden. This allows you to compound and build your wealth in real estate over time as you can continue to exchange into bigger and better replacement property.
CPEC1031, LLC
At CPEC1031, LLC we have over two decades of experience facilitating 1031 exchanges of all shapes and sizes. We can put our experience to work on your next 1031 exchange and answer all of your questions along the way. Contact our team of qualified intermediaries today to learn more about our full service capabilities and see how we can help you with your 1031 exchange. You can find us at our offices 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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