In a hot seller’s market, many property owners get excited to sell their real estate and make a good chunk of change. However, with dollar signs in their eyes, many property owners don’t fully consider the capital gains taxes that they’ll owe on such a sale. A 1031 exchange can help you defer these capital gains taxes. In this article, we are going to talk about why you should always consider a 1031 exchange if you’re thinking of selling real property.
The Many Benefits of a 1031 Exchange
1031 exchanges are not for every situation, but they’re always worth a look when you’re getting ready to sell a piece of real estate. Section 1031 of the Internal Revenue Code allows any US taxpayer to defer their capital gains taxes on the sale of real estate so long as they meet certain requirements, such as:
The property involved in the transaction must be like-kind
The property must be held for investment or business purposes (not for personal use)
The taxpayer must reinvest their sales proceeds into a replacement property
This allows you to avoid a big tax windfall and keep your money compounding wealth over time in a newer, bigger replacement property.
With over two decades of experience under our belt, we have the skills and experience needed to ensure your 1031 exchange runs smoothly. Our qualified intermediaries can help you prepare 1031 documents, advise you on replacement property identification, and answer all of your questions along the way. Contact us today at our downtown Minneapolis office to learn more about how you can save money on a tax-deferred exchange.
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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