A 1031 Exchange allows us to sell a piece of investment, trade or business property, buy a new property, and defer the gain or profit from the sale (not owe taxes on the sale immediately). If you eventually sell the new piece of property, you would owe taxes at that time. Generally, all gains and losses on sales of real estate are taxable, but an exception lies within a 1031 exchange where the property sold is traded or "exchanged" for the same or link kind property. The new property is seen as a continuation of the original investment, so taxes are not due at the time of the sale.
Many people believe that tax-deferred exchanges are only for professional investors and huge corporations but this is simply not true. The main strategy is to purchase a rental home below market value, rent it for a year, sell it, and buy two rental properties for your own good. If you do this several times, there is a tendency that the IRS may take view that you are not a long term investor and disallow such exchanges. When you are ready to do a tax-deferred exchange, you will need a qualified intermediary, a CPA, or an attorney and you should always get professionals advice.
The 1031 Tax-deferred exchange is a great way to maximize your wealth. By keeping your investments growing without immediately paying taxes, you can do wonders for your net-worth. Remember, if you are planning to do a tax-deferred exchange, you really need to ask for advice from a professional that handles these transactions on a regular basis.
Get Your 1031 Exchange Started
Get your 1031 exchange started today by contacting CPEC1031. Our team of skilled qualified intermediaries has been facilitating like-kind exchanges of real estate for over two decades. We bring that level of experience to the table with each exchange we facilitate. Reach out to our team of 1031 exchange professionals today to learn more about the process and how we can help with your next transaction. You can find us at our primary office in downtown Minneapolis, or at one of our satellite offices around the country.
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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