What is a 1031 Exchange?
A 1031 exchange
is used to sell a property and buy other like kind property without paying the Capital Gains Tax. These transactions are known as deferred exchanges, or 1031 exchanges, and allow an investor to continue their investment in another property without loosing investment equity to taxes.Trading or exchanging property
has gone on for many years but there were no clear IRS rules on how those transactions would be taxed. Section 1.1031 of the Internal Revenue Code lays out in detail the procedure for turning a sale and purchase type transaction into an deferred exchange. These rules allowed the owners of business and investment Real Estate to buy and sell their property on the open market, and by following these simple rules defer the payment of the Capital Gains tax.One important rule is that the property must be of “like kind.” This provision is actually quite broad for real property. It includes land, rental, and business property, any of which, can be exchanged for the other.
The rules also require that the "exchanger" must use a safe harbor to hold the proceeds while the transaction is being made, and spells out what those safe harbors are.
You can find a safe harbor and more information at 1031help.com.
Contact Sales Agent : Nick J Anagnos
E-MAIL Address : anagnosnick@gmail.com
WRIGHT CHOICE REALTY INC.
Nick's Cell # 321-626-3513
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