A Section 1031 tax exchange can be used in a situation where an individual who has just sold property can defer the payment of the capital gains tax levied on his sale. It is typically used when one uses the money raised from selling a property to purchase one or more replacement properties.
A 1031 is a swap of a business or business assets. This means that the IRS does not see as a capital gain or investment and the asset can continue to grow maintaining a tax deferred status.
Forbes Magazine is a financial publication providing numerous articles about various financial entities and vehicles. The Forbes website contains articles that explain about a 1031 Exchange, and what taxes might be involved with them.
No. The processes differ quite a bit. The Section 1031 code governs the taxes associated with the land exchange, so that people who exchange land aren't taxed as if they were just selling land and thus being subject to capital gains taxes.
In the regular sale of a property the owner is taxed. However, Section 1031 allows a person to sell their property and defer paying capital gain taxes by purchasing a replacement property. This allows the person to keep 100% of their money. Otherwise, the person would lose one-third of their funds to taxes.
Not avoid...delay. At whatever point the property(s) you do a successful Section 1031 exchange is sold without an exchange, the gains will essentially be claculated from all the properties. Your basis in the "new" property you exchnage into is the same as the one you exchanged out of.....hence if the values are the same...the gain is still there on sale. S -1031 and Like Kinf Exchanges (LKE) are really very technical and filled with requirements...make sure you have professionals involved. On the deal side, they are also rather hard to put together.
A 1031 is a swap of a business or business assets. This means that the IRS does not see as a capital gain or investment and the asset can continue to grow maintaining a tax deferred status.
I am not a CPA, but that is the way I understand it. Best to consult a tax professional and stay out of trouble.
There are many ways one can use a 1031 exchange. If one seeks more information on the 1031 exchange process and 1031 exchange properties, one might consult a Forbes professional.
Forbes Magazine is a financial publication providing numerous articles about various financial entities and vehicles. The Forbes website contains articles that explain about a 1031 Exchange, and what taxes might be involved with them.
No you do not. You must make a transaction with the Internal Revenue Service to receive the 1031 exchange.
A 1031 Exchange is great for owners or investment real estate. It allows the owner to sale the investment land and use the funds to purchase a "like kind" property and not be liable for capital gaines taxes.
1031 Exchange properties are properties meant for exchange. The concept can be related, or though of, as a Timeshare, though it obviously has its varying, and unique, differences.
One can learn about the Section 1031 exchange online on sites such as 1031exc and 1031 exchange advantage. One can also get more information at places like H&R Block.
The 1031 real estate exchange allows the investor to sell property, and reinvest the processed into another property. The 1031 real estate exchange protects investors against the capitol gain taxes.
Definitely need to contact a tax attorney or CPA
First of all, a §1031 Like-Kind Exchange only applies to property used in a trade or business or held for investment purposes. Therefore, you cannot take advantage of §1031 if your home is involuntarily converted. Second, the rules under §1033 are much more flexible than the rules under §1031. For example, the sales proceeds in a §1031 Exchange must be held by a Qualified Intermediary such as the ES Group until they are used to purchase the replacement property. However, the property owner can hold their own funds in a §1033 Involuntary Conversion Exchange. Also, when dealing with property that is used in a trade or business, or held for investment purposes, the taxpayer has 3 years to purchase the replacement property instead of the 180 days one would have in a §1031 Like-Kind Exchange.
One can find information on 1031 property exchange on various websites like 1031 and expert1031. Both websites offer a great amount of information regarding this subject.