A lot of taxpayers want to jump right into a 1031 exchange. But there are some things you should know before starting the process. In this article, we are going to walk through a few essential things to be aware of before starting a 1031 exchange of real estate.
Understand the Recent Changes
Prior to 2019, it was possible to exchange both real and personal investment property under section 1031 of the Internal Revenue Code. The recent Tax Cuts & Jobs Act changed that and got rid of the personal property aspect of the 1031 exchange. As a result, it’s important to be aware that you can only do a 1031 exchange of investment real estate. Personal property items like aircraft, artwork, and the like are all excluded from 1031 treatment. If you are exchanging real estate and your real estate includes items that are classified as Section 1245 property, these items are fully taxable. So be aware of that when conducting your exchange.
Mind Your Time Limits
In a 1031 exchange you only have 180 days total from the start of your exchange to its completion. That may seem like a long time, but it’s not when it comes to real estate. Make sure you are fully aware of your time limits so you don’t miss any deadlines.
Minnesota 1031 Exchange Tax Deferral
If you own invest real estate and want to learn more about how to defer your capital gains taxes, contact a qualified intermediary at Commercial Partners Exchange Company! Our intermediaries have been guiding taxpayers through the ins and outs of the 1031 exchange process for the past twenty years. Reach out to us today to learn more about the 1031 exchange process and how it can benefit you from a tax perspective. Our main office is located in downtown Minneapolis but we work with clients throughout the state of Minnesota and the United States.
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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