What Exactly Are The Tax Advantages In Exchanging?
You can eliminate paying any capital gains taxes, and you can eliminate paying the even higherrate taxes on the recapture of depreciation you've taken on your property. By exchanging into a higher priced property you'll also gain additional depreciation deductions which can increase your aftertax income.
Other 1031 Exchange FAQs
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Q:
What Is 1031 Exchange?
A: A 1031 exchange is a method for deferring capital gains tax on a real estate transaction. -
Q:
How Can I Qualify To Defer My Taxes When I Sell My Property?
A: Any investor can qualify! Section 1031 of the IRS code lets you sell your property and buy a new property and deferring the payment of taxes owed. You simply … More -
Q:
What Is A Qualified Intermediary?
A: The IRS says if you touch the money you pay the tax. However, if you use a qualified intermediary to transfer the money from the sold property into the purchased … More -
Q:
Can I Get Legal Or Tax Advice From An Intermediary?
A: No, the IRS doesn't allow a person to act as both your qualified intermediary and your attorney or tax advisor. So work with your attorney and CPA to make sure your … More -
Q:
Can I Avoid Paying Taxes Forever?
A: Yes, you can. By simply following the 1031 exchange rules every time you sell one or more properties and buy replacement properties, when you die your estate escapes … More -
Q:
Are There Reasons To Exchange Other Than Tax Advantages?
A: Yes, there are many nontax reasons to exchange. For example, if you no longer like managing property, you can exchange your management intensive property for … More -
Q:
What Kind Of Real Estate Qualifies For A 1031 Exchange?
A: Almost every kind of real estate is considered "like kind" and can be exchanged for any other real estate, including vacant land for apartments, a rental house for a … More -
Q:
How Long Can I Take To Buy A New Property?
A: You have 180 days between the closing date on the sold property and the closing date on the purchased property. -
Q:
Can I Buy A New Property Before Selling My Old One?
A: Yes, you can buy a new property before selling the old property and still qualify it's called a "reverse" exchange. A qualified intermediary takes title to the … More -
Q:
Can I Get Money Out Of The Exchange Tax Free?
A: Yes, one way is to complete the exchange first and then refinance the new property.