QUESTIONS When should you use a 1031 Exchange? There are two main questions to ask yourself: 1) Will I incur capital gains tax when I sell my investment property? 2) Do I want to purchase a replacement property? You may also want to utilize a 1031 exchange to carry out a mix of business strategies.… Continue reading When can you use a 1031 exchange in real estate?
The United States Congress enacted the first exchange statute through the Revenue Act of 1921. The act, which allowed both like-kind and non-like-kind exchanges for a legal, regulated tax-deferred exchange had three purposes: To avoid unfair taxation of investments in property that are ongoing To encourage active reinvestment For administrative convenience The third became irrelevant… Continue reading The History of 1031 Exchanges
A wise investor’s vehicle for deferring capital gains taxes or depreciation recaptures, 1031 exchanges were first adopted by the IRS in 1954. That’s when the present day definition of a like-kind exchange was adopted. Decades later, there are still many misconceptions about how these exchanges work. • Like-kind means “exactly the same.” The IRS requires… Continue reading Misconceptions About 1031 Exchanges
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act, enacting sweeping changes to the U.S. tax framework which took effect at the beginning of 2018. The new tax framework had one major change to Section 1031 of the IRS tax law: no longer can personal property, including franchise licenses, machinery and… Continue reading The New Tax Law and Like Kind Exchanges
Who Qualifies? If you own an investment or business property, you can qualify for a 1031 exchange, whether you’re an individual, C or S corporation, partnership, or LLC. Same Taxpayer The buyer of the replacement property must be the same tax entity as the seller of the relinquished property. A Qualified Intermediary A Qualified Intermediary… Continue reading A Quick Look at 1031 Rules
Internal Revenue Service tax code 1031 relates to real estate exchanges, allowing investors to defer capital gain tax payments on the sale of the property by reinvesting the proceeds into another business or investment. It is one of the most underutilized sections of the tax code, even though it offers many benefits to investors who… Continue reading What I Learned About 1031 Exchanges That Can Help You, Too
It’s a real estate investors’ dream—a property that highly appreciates in value over time. The downside to that dream, though, is the prospective hefty capital gains tax bill which can either trap that wealth in the property, or force the investor to pay a heavy price to the IRS upon the sale of the property.… Continue reading Capital Gains Tax Deferral Through 1031 Exchanges