Taxpayers conduct like-kind exchanges for various reasons, depending on their specific situations. Indeed, there are many benefits provided by section 1031 of the Internal Revenue Code, but many people are unaware of these benefits. In this article, we discuss three key benefits of doing a 1031 exchange of real estate.
Tax Deferral
A 1031 exchange allows you to keep your money working for you in a continuation of your investment. If you dispose of a property in a traditional, straight-forward sale, you will need to recognize and pay capital gains taxes on the net proceeds from that sale. A 1031 exchange offers you a tax-advantageous alternative in which you can defer those gains by reinvesting your proceeds into a replacement property of equal or greater value.
Growth
By leveraging the proceeds from your relinquished property sale, you can accelerate the growth of your wealth. By doing so, a 1031 exchange can help compound your wealth over time as you (potentially) continue to exchange into bigger and better properties.
Flexibility
1031 exchanges give you the flexibility to upgrade, diversify, or reposition your assets. You can exchange into and out of different geographic regions and industries. For example, you can sell a retail space in Edina, Minnesota and exchange into an apartment complex in Houston, Texas.
Tax-Deferred Exchange Company
CPEC1031, LLC helps taxpayers with tax-deferred exchanges under section 1031 of the Internal Revenue Code. We have been helping people with their 1031 exchanges for over twenty years and we can help you too! Contact us today to learn more about the like-kind exchange process and see if your property qualifies for 1031 exchange treatment.
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.
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