There are many benefits of performing a like-kind exchange of real estate instead of selling your property in a typical transaction. In this article, we’re going to offer three benefits of deferring taxes with a like-kind exchange of real estate.
Avoid a Tax Windfall
The most obvious benefit of conducting a like-kind exchange of real estate is the ability to defer your taxes on the sale of real estate. In a typical real estate sale, the seller has to pay capital gains taxes on the net proceeds from the sale. In a 1031 exchange, you can defer those capital gains taxes and avoid a huge tax windfall. To do this you must move all of your net proceeds into new replacement property. In doing so, you avoid a tax hit and keep your money compounding wealth over time.
Diversify your Real Estate Portfolio
1031 exchanges are also a great way to diversify a real estate portfolio into different asset classes, alternative market segments, and geographical areas.
Selling Vacation Homes
Vacation homes can also be exchanged in 1031 exchange transactions. That being said, there are some additional restrictions on 1031 exchanges of vacation homes. For more information on 1031 exchanges of vacation homes, check out this article.
MN Qualified Intermediary
At Commercial Partners Exchange Company, our MN qualified intermediaries have decades of experience facilitating real estate exchanges for clients large and small. 1031 exchanges are complex. You need an intermediary on your team who can simplify the process for you. Our intermediaries will prepare all of your 1031 documents, advise you on replacement property, and answer all of your questions along the way. Contact us today to discuss the details of your like-kind exchange and how you can defer your taxes and maximize your gain.
- 1031 Hotline: 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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