Many real estate investors are curious about the tax-saving benefits of a 1031 exchange. But in some situations, it can be difficult to determine whether or not you are a good candidate for a 1031 exchange. In this article, we are going to talk about how to figure out if your property is a good candidate for 1031 exchange treatment.
How 1031 Exchanges Work
A 1031 exchange is an alternative to a traditional real estate sale in which the taxpayer moves their net proceeds from the sale of one property into a new replacement property. When done correctly, the taxpayer can defer their capital gains taxes on the sale.
How to Determine 1031 Exchange Eligibility
Deferring your capital gains taxes on the sale of investment property sounds great, but not all types of property qualify. Here are a few basic factors that can help determine if your property is a good candidate for 1031 exchange:
Qualifying Purpose. All property involved in a 1031 exchange needs to be held for the qualifying purpose of investment or business use. That means personal property cannot be used in a 1031 exchange.
Like-Kind Property. All property involve din a 1031 exchange also needs to be like-kind, which includes most real estate.
Equity, Value, Debt. In order to successfully defer all of your capital gains taxes, your replacement property also needs to increase in value, equity, and.
Start Your Real Estate Exchange
Still have questions about whether or not your property qualifies for 1031 exchange treatment? Contact the qualified intermediaries at CPEC1031, LLC today to learn more about the process. We have been facilitating 1031 exchanges for over twenty years and can help you through every stage of the like-kind exchange process.
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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