Our 1031 exchange services provide investors with a tax-deferred way to sell one investment property and purchase another. We help clients navigate the complex rules and regulations of 1031 exchanges to ensure that they are in compliance and that they receive maximum tax benefits.
A 1031 exchange is a tax-deferred exchange of one property for another property that is of the same nature or character, such as real estate for real estate. Here are some general rules to keep in mind:
The property being sold and the property being acquired must be of the same nature or character. For example, you can exchange a rental property for another rental property, but not for a personal residence.
There are strict time limits for completing a 1031 exchange. The replacement property must be identified within 45 days of the sale of the original property, and the exchange must be completed within 180 days.
You must use a Qualified Intermediary (QI) to facilitate the exchange. The QI holds the funds from the sale of the original property until they are used to purchase the replacement property.
The proceeds from the sale of the original property must be reinvested into the replacement property. If you receive cash or other property as part of the exchange, you may be subject to taxes on the non-like-kind property.
A 1031 exchange allows for the deferral of taxes, not the avoidance of taxes. When the replacement property is eventually sold, taxes will be due on any gains.
You can identify up to three replacement properties and complete your exchange by purchasing one or all of them, regardless of their total value.
If you identify more than three potential replacement properties, the total fair market value of all identified properties cannot exceed 200% of the fair market value of your relinquished property.
If neither of the other two rules fit your needs, you can also identify any number of replacement properties regardless of their total value, as long as you purchase 95% of the total value of all the properties identified.
To schedule a showing or ask questions about buying or selling, please contact us using the form below.
To schedule a showing or ask questions about buying or selling, please contact me using the form below.
