During the course of a 1031 exchange, you need to be extra careful with the sales proceeds from your relinquished property sale. Many people are not aware of the rules that govern like-kind exchanges and thus don’t know what to do with these proceeds.
Do Not Take Receipt of the Proceeds
The most important rule you need to remember is to not take constructive receipt of these proceeds during the 1031 exchange process. Doing so will trigger taxable “boot” and you will not be able to defer 100% of your capital gains taxes.
The safest way to insulate yourself from receiving these funds is to work with a qualified intermediary who can hold the funds on your behalf in a segregated account. When it comes time to acquire your replacement property, your intermediary will move the funds from this separate account into the new property, keeping you away from receiving any taxable boot.
Get in Touch with a Like-Kind Exchange Intermediary
Contact CPEC1031, LLC today to get in touch with a like-kind exchange intermediary and discuss the benefits of doing a 1031 exchange. Any US taxpayer can use section 1031 to their advantage and defer capital gains taxes when selling investment real estate. But there are a variety of rules you need to abide by in order to fully defer your taxes in a like-kind exchange. Our qualified intermediary have more than twenty years of experience in the 1031 exchange industry. Let us put our experience to work on your like-kind exchange and start realizing the many benefits of the 1031 exchange.
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.
© 2024 Copyright Jeffrey R. Peterson All Rights Reserved