A 1031 exchange allows you to defer capital gains taxes on the sale of a property when you purchase another property similar to the one that was sold. You would not have to pay taxes until the corresponding property is sold. Since you have purchased a like-kind property, you have not made an actual sale.[…] Read More
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What Are Common Types of Like-Kind Properties?
Navigating the complexities of a 1031 exchange can feel overwhelming, especially when determining what qualifies as like-kind property. The term “like-kind” is central to the process, but many are surprised by the flexibility it offers. This blog will break down the most common types of like-kind properties to help you better understand your options and[…] Read More
Can I Use My 1031 Exchange Fund to Improve My Property?
A 1031 exchange, often referred to as a “like-kind exchange,” is a tax strategy that allows investors to defer paying capital gains taxes on an investment property when it is sold, as long as the proceeds are reinvested into a new property of equal or greater value. This can be a valuable tool for real[…] Read More
What Are Common 1031 Exchange Misconceptions?
Many people are unaware of how powerful and easy it is to use a tax-deferred 1031 exchange. However, there are several misconceptions about 1031 exchanges, largely due to a lack of understanding and planning. Below are some things you should know if considering a 1031 exchange. “Like-Kind” Property The “like-kind” property provision does not require[…] Read More
How Long Is the Holding Period for a 1031 Exchange?
The 1031 exchange process can be complex, and failure to comply with the stringent requirements set forth by the Internal Revenue Service (IRS) can result in disqualification of tax deferral and other benefits. A common challenge during the 1031 exchange process involves strict adherence to the time constraints provided by the IRS. While some timelines[…] Read More
Do I Need a Qualified Intermediary for a 1031 Exchange?
A qualified Intermediary (QI) is an unrelated party to a real estate transaction who facilitates a tax-deferred, like-kind, or 1031 exchange. The QI has no economic interest in the transaction except for any compensation, or exchange fee, they may receive for facilitating the exchange as defined in Section 1031 of the Internal Revenue Code (IRS).[…] Read More
How Can a Lawyer Reduce the Risks of a 1031 Exchange?
Despite all the benefits of 1031 exchanges, the process is not without risk to investors. Understanding the pitfalls are important. The following are the rules and risks of 1031 exchanges: In addition to the stringent timelines, there are other things that can make the 1031 process complicated. Choosing the wrong qualified intermediary (QI) is a huge[…] Read More
Can I Do a 1031 Exchange After Closing?
Tax laws in the United States give real estate investors many benefits. Deferring the payment of capital gains tax is one example. The Internal Revenue Service (IRS) assists real estate investors with building wealth by allowing the deferred payment of capital tax gains through a 1031 exchange. In light of all the advantages of real[…] Read More
Can I Do a 1031 Exchange on a Rental Property?
A 1031 exchange is a commonly used real estate transaction where you can swap out an investment property for another like-kind property, which helps you avoid paying capital gains tax. Without the 1031 exchange, you normally would have to pay taxes as soon as the sale occurs. However, if you do a 1031 exchange on[…] Read More
What Are Exchange Property Identification Rules?
If you are selling an investment property, the proceeds from the sale are subject to capital gains taxes unless you follow the rules of a 1031 exchange. A misunderstanding or mistake in following any of the rules could be costly, as your sale becomes a taxable event with anywhere from 20 to 35 percent of[…] Read More