What is a Maryland 1031 Tax Free Exchange prepared a Maryland attorney
Written by admin on June 3rd, 2011Article by Michael Dar
A Maryland 1031 Tax Free Exchange is a tax planning tool in real estate that produces huge tax savings to owners of real estate. Essentially the way a Maryland 1031 tax free exchange works is that if you own business real estate property or investment real estate property and you desire to sell that existing property and purchase a brand new property which is more expensive than your current property then you can essentially do this without having to currently pay the capital gains tax if your property has appreciated. When real estate business property or investment property is sold you will be subject to capital gains tax on that as you have built some gain in the property. However, by utilizing the 1031 Tax Free exchange mechanism you can sell your current property and “immediately” purchase your new property without having to pay that capital gains tax. What you will need is a “qualified intermediary” that can facilitate your Maryland 1031 Tax Free Exchange.
Maryland Express Legal Online such a “qualified intermediary”. With Maryland Express Legal Online a Maryland Attorney will prepare your 1031 tax free documents and will facilitate the entire tax free transaction. It is very important that a professional such as a Maryland Attorney facilitate the transaction because firstly if any mistake is made on the transaction or the paperwork with the transaction that needs to be filed with the IRS you will lose your tax free status. Also, the IRS regulations state that the money received from the sale of your current property must not be “touched” by you as the owner. It must go directly to the “qualified intermediary” who will then provide the funds for purchase of the new property. The mechanism of a 1031 tax free exchange is quite complex however by utilizing a Maryland Lawyer to facilitate the transaction is a very efficient and cost effective way of performing the 1031 tax free exchange.
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