Getting the Help You Need for a 1031 Exchange

Written by admin on May 9th, 2011


There are quite a few benefits that you will want to keep in mind when it comes to a 1031 exchange for your next property investment venture. It is best to begin by explaining the basics of a 1031 tax exchange, which is also referred to as a tax deferred exchange.


Simply put, you can defer the capital gains taxes earned from the sale of an investment property, provided you invest 100% of equity into a similar property of equal or greater value.


So, what are the benefits to you? First of all, you are able to defer the taxation on your capital gains until a later date. You are probably in a position, at the moment, where you are earning more than you will be when you retire. This means that you are in a higher tax bracket than you anticipate being upon retirement (unless of course you invest very well). In other words, if you can put off the tax payment on the gains from the sale of the property, you stand to pay a lower percentage.


The IRS is very specific in the requirements for a 1031 tax exchange. This means that it is a good idea to have your ducks in a row before you decide to go this route. The best course of action is to consult a tax professional who is skilled in handling tax deferred exchanges, as well as a realtor who is aware of your goal in “trading up” to a more suitable property.


Once you find a solid commercial realtor who is aware of your goals, you will find the services are invaluable as your investment portfolio grows and your goals and needs change. Selecting the right professionals to partner with is the first step you should take in order to take advantage of this particular tax benefit for property investors.

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