Investment
Tools
What
is a 1031 Exchange?
Internal Revenue Code (IRC) Section 1031 is one of the last remaining
tax loopholes. It is a powerful tool that allows investors to exchange
any investment property for any other investment property. For your
exchange to be valid, you must follow specific IRS regulations.
Here is
an abbreviated list of the regulations:
The properties being exchanged must be of like kind.
For example, you may exchange:
- A house
for another house (or several houses)
- A house
for commercial real estate land for rental property
- A strip
mall for an office building any investment property for any
other investment property (as long as it is not occupied as
your primary residence)
- You must
identify and close on your replacement property within a specific
period of time.
- 100% of
the proceeds from your current property must be held by a Qualified
Intermediary and applied toward your replacement property to
get a full tax deferral.
- Your replacement
property must be of equal or greater value to the property you
have sold to get a full tax deferral.
- Properties
being exchanged must be used for investment. Personal residences
are not exchangeable
We can refer you to an expert attorney who specializes in that
area.
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