1031 Exchange Allocation Best Practices

1031 Property Allocation

In this article, we are going to discuss some best allocation practices when selling a business or real property in a 1031 exchange.

Best Allocation - Sale of Business / Real Property

The first place to start is to drill-down on the value (or price) allocated to the real property, the amount of remaining debt on the property and the current adjusted basis on the real property. If you can allocate to the non-real estate components a price that is close to the remaining basis in the good will and personal property, then you may be able to increase the tax efficiency and defer more of the gains on the overall sale.

It's always a good idea to involve your CPA in the discussion as well to determine the best allocation strategy for your situation.

For more information, read our article on the 1031 napkin test.

  • 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.


© 2018 Copyright Jeffrey R. Peterson All Rights Reserved