1031 exchanges can get complicated quickly and many investors are intimidated by the process. That’s where we can help. In this article, we are going to outline how the 1031 exchange works in plain English.
The 1031 Exchange Process Explained
Let’s start with a brief explanation of the 1031 exchange process. There are several different types of 1031 exchanges, but the most common is known as the forward 1031 exchange. In this type of exchange, you begin by selling your relinquished property. Over the next 45 day period, you submit written identification of the replacement property you intend to use in the exchange. Then, within 180 days from the date of the sale of your relinquished property, you acquire your new replacement property.
In order to defer all of your capital gains taxes, you need to make sure that you reinvest 100% of your net proceeds from the sale of your relinquished property into your new replacement property. If you receive any cash during the process, it will be considered taxable “boot” and you will not be able to defer all of your capital gains taxes.
Defer Your Capital Gains Tax Burden with a 1031 Exchange
Defer your capital gains tax burden when selling investment or business real estate by engaging in a 1031 exchange transaction. Section 1031 of the Internal Revenue Code offers an excellent opportunity to defer your taxes and build your wealth over time in a continuation of your investment. The qualified intermediaries at CPEC1031, LLC have been facilitating 1031 exchanges of all shapes and sizes for decades. Let us help you through the details of your next like-kind exchange and start deferring your capital gains taxes!
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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