Forward 1031 Exchanges
A 1031 exchange is a powerful tax tool that can help you defer capital gains when selling real estate. In order to do so, you need to meet certain criteria. First off, not all property qualifies for 1031 exchange treatment. Section 1031 only applies to investment and business real estate – which means real estate held for personal use (your primary residence, for example) would not qualify.
How a 1031 Exchange Works
Here’s how a 1031 exchange works in a nutshell: (1) you sell your relinquished property; (2) you identify new replacement property; and (3) you acquire new replacement property and reinvest the net proceeds from your relinquished property sale. You have 180 days total to complete your 1031 exchange. The first 45 of those days is set aside as your identification period in which you must identify, in writing, your new replacement property.
The Benefits of a 1031 Exchange
A 1031 exchange offers many benefits – the greatest of which being capital gains tax deferral. In a typical straight-forward real estate sale, the seller is responsible for paying capital gains taxes on the sale of the property. This can add up to a hefty tax burden. 1031 exchanges allow you to defer these capital gains taxes so long as you reinvest your net proceeds from the sale into a like-kind replacement property. This keeps your money compounding over time in a continued investment.
Contact a 1031 Exchange Company
If you’re looking to save money in capital gains taxes on the sale of your investment property, a 1031 exchange may be a perfect fit. It’s important to consult with a qualified intermediary about the details of your exchange before starting the process.
TransAct Title has collaborated with EquiCap 1031 Exchange Company (“EquiCap1031”) to faciliate 1031 exchanges for our clients. Reach out to EquiCap1031’S qualified intermediaries today to learn more about the 1031 exchange process and how they can help. You can contact EquiCap1031 at their primary office in downtown Minneapolis, or at one of their satellite offices across the United States.
The Woodlands, Texas 77380