In order to defer 100% of your capital gains tax burden in a like-kind exchange, there are a variety of rules you need to follow. In this article, we are going to detail a couple basic rules for conducting a fully tax-deferred 1031 exchange.
Don’t Exceed Your Time Limits
There are many things that can delay or derail a commercial real estate transaction. However, 1031 exchanges are governed by unforgiving time tables. Once you begin the process, you have just 180 days to complete your exchange. The first 45 days of that period make up your identification period, during which you need to identify in writing the replacement property that you wish to use. If you miss any of these deadlines, it’s likely that your exchange will fail so it’s important to be well prepared before beginning the exchange process.
Go Up in Value, Equity & Debt
Finally, you need to make sure that your replacement property goes up in value, equity, and debt in comparison to your relinquished property. If you don’t meet these thresholds, you may still be able to do a partial 1031 exchange (in which you defer some, but not all, of your capital gains taxes), but ideally you want to defer 100% of your taxes by making sure your replacement property goes up in these three categories.
Start Your 1031 Exchange Journey Today
Start you r1031 exchange journey today by calling the qualified intermediaries at CPEC1031, LLC. With over twenty years of experience under our belts, we have the knowledge and expertise needed to take your 1031 exchange across the finish line. Our team is ready and waiting to answer all of your questions about section 1031. Let us help you reap the tax-saving benefits of a 1031 exchange of real estate. We work with clients all over the state of Minnesota and across the United States.
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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