 |
|||||||||
Allows you to defer capital gains tax and use the increased equity to purchase a larger property or properties. You may exchange several properties into one property to relieve the burden of maintaining multiple properties. You may wish to exchange from one property with substantial equity to several smaller properties. Then if you wish to eventually sell off some of the smaller properties, the tax burden would be significantly less. You may wish to diversify by exchanging a property into another city or state, in order to take advantage of increased growth and appreciation in a specific area. You may wish to exchange to a different type of property to take advantage of increased growth and appreciation. To Accomplish A 1031 Tax Deferred Exchange you need to enter into an agreement to transfer the relinquished property(s) in exchange for replacement property(s) which you have not yet located or identified. Eligible Property for an Exchange must be "Like Kind." Both the relinquished property(s) and the identified replacement property(s) must be for business use or investment purposes. You may exchange for properties in different cities, localities and states. Apartments, office buildings, rental houses, ranches, commercial properties, retail properties, industrial properties and raw land are all considered to be "Like Kind." Your personal residence, partnership interests, inventories, and dealer properties are not "Like Kind," therefore ineligible and excluded from exchanging. There are two important time periods, that must be observed. From the date of closing of escrow of the relinquished property(s), you have 45 Days to identify all replacement property(s) in writing and 180 Days from the date of closing of escrow of the relinquished property(s) to complete the exchange and close escrow on the replacement property(s). Important, If those days fall on a holiday or weekend you must complete them on the business day before the holiday or weekend. There are no automatic extensions. You may identify more than 1 replacement property regardless of the number of relinquished properties transferred as part of the same exchange. Up to 3 properties of any value or more than 3 properties with an aggregate fair market value up to 200% of the fair market value of the relinquished property(s). The Replacement Property must be of equal or greater value and the trade must be of equal or greater equity and debt. You also must avoid "Constructive Receipt" of the exchange proceeds. The transaction must be handled and all funds held by a "Qualified Intermediary" or "Accommodator" in order for the completed exchange to qualify as "tax deferred." This information, though believed to be accurate, should not be relied upon without verification by consulting a tax professional. << BACK TO FAQ
|
|||||||||
|
||||||||||||
|
|
||||||||||||
|
|
||||||||||||
|
|
||||||||||||
|
||||||||||||
