Capital Gains Investment Property Taxes - 1031 Exchange Capital Gains

Defer Payment of Capital Gains Investment Property taxes through IRS Section 1031

Investors seeking to defer the payment of capital gains tax for tenant in common investment properties must carefully follow the six essential rules for legally complying with IRS Section 1031. By deferring paying capital gains investment property taxes, an investor is allowed to increase their buying power by retaining their profit and appreciation through exchanging proceeds from the sale of the property into another like-kind or greater value property. A capital gains 1031 exchange allows an investor to modify their investment strategy by increasing their buying power and flexibility to flip properties with a savvy tax tool. The following are the six primary rules for legally deferring capital gains tax for tenant in common investment property:

• 100% Reinvestment: To legally defer paying capital gains investment property taxes, a real estate investor must invest 100% of the profits and proceeds from the sale into the 1031 exchange tenant in common property.



• Real Property: Both the old property and the new capital gains investment property must qualify as investment property or business use.



• Identification Period:An investor has 45 days to identify three potential capital gains 1031 exchange properties from the date of closing of the old property.



• Exchange Period:An investor has 180 from the close of the old investment property to purchase one of the properties on the list created within 45 days.



• Qualified Intermediary:An independent Qualified Intermediary must handle the transaction. This person should be well informed and updated on the nuances of the Capital Gains 1031 regulations and navigate you through the process of filing legal documents to satisfy the IRS' requirements.

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