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IRS 1031 Tax Exchange
Find more info in "TAMMY'S LIBRARY" in the Investor's Den! |
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Do you own investment property? |
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Real Estate Investors can avoid paying capital gains tax by performing an IRS 1031 Tax Deferred Exchange. This exchange is frequently used for leveraging the equity of investment property. With an IRS 1031 tax exchange, you utilize the proceeds from the sale of an investment property to buy other investment property and without having to pay any capital gains tax on the equity you earned from the original property. |
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- Below are extremely important rules which you must obediently follow when participating in a 1031 exchange. (The Internal Revenue Service is unforgiving when it comes to these rules so follow them to the letter!
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Exchange of properties: You must use all of the proceeds from the sale of your original property to purchase the other "like-kind" property(s) with the tax exchange.
Identification period (The 45-day Rule): You have 45 days from the time of the sale of the original property to find a replacement property to purchase within the exchange. You can identify up to 3 replacement properties, but you are not obligated to buy each or all of the 3 properties. You can actually identify an unlimited number of properties if desired, as long as their total value is not more than 200% of the original property's value.
Exchange period (The 180-day Rule): You have 180 days (or the due date of your IRS tax return, whichever is sooner) to complete the IRS tax exchange and purchase your new property(s).
The Intermediary: When participating in an IRS 1031 tax exchange, you are never permitted at any time to gain access to or control of the proceeds from the sale of the original property. An intermediary must be used to handle the funds while the replacement properties are being purchased. |
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Disclaimer: The brief description above is not to be construed as legal advice or tax advice. Always be sure that you have proper documentation of all the actions you take in pursuance of your tax strategy. Please contact your tax and legal advisors for more information.
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Please let me know in the area provided below if you are interested in learnng more about an IRS 1031 Tax Deferred Exchange. I am anxious to answer any questions you might have! You may also find a wealth of information on IRS 1031 Tax Exchanges in the "Links" section of this site in the Investor's Den! |
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| TAMMY STARR |
| ERA Realty Pros |
| 170 Flanders Rd, Niantic, CT 06357 |
| Phone: 860-625-0354 |
| Fax: 860-739-2314 |
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