IRS Section 1031 Tax Deferred Exchange
Section 1031 of the Internal Revenue Code allows an owner of qualifying investment property to exchange the property for another “Like Kind” property, and by so doing, defer paying federal and state capital gains taxes on the sale.
“Like Kind” property does not have to be identical to the property being relinquished (“sold”). Examples of like kind property might be single family, duplex, and multi- family rental property, commercial property, and raw land (residential, commercial, rural, etc.) as long as the acquired property meets the test of “being held for productive use in a trade or business or for investment”.
It is important to take note of the time requirements of 1031 Exchanges, as they must be tightly adhered to. The actual exchange does not have to be simultaneous, and is most normally deferred. Potential replacement properties must be identified within 45 days and the closing must take place within 180 days of the sale of the relinquished property. The actual mechanics of the exchange are handled by a party known as an Intermediary and they handle the details of the exchange and the documentation required for compliance with Section 1031. There are numerous variations of how an exchange can be structured. To learn more on this subject you can visit:
www.apiexchange.com
www.section1031.com
www.allstates1031.com
Posted by companies that provide services as Intermediaries, these sites provide additional information on all aspects of 1031 Exchanges.
Nash Realty has introduced this valuable tool and its benefits to numerous Sellers and has worked with many Buyers and Sellers as they take advantage of Section 1031 Exchanges. If you are interested in learning more about 1031 Exchanges and how they may be of benefit to you, and how Nash Realty can assist you we invite you to contact us at 603-279-6565.