1031 Real Estate Exchange - 1031 Property Exchange

1031 Property Exchange is a good way to defer your capital gain taxes

A 1031 Property Exchange is one of the best tax tools available for real estate investors to transfer the gains from the sale of an investment property into another property without paying capital gains and depreciation recapture taxes. A 1031 Exchange Real Estate investment property is a sound way to legally defer paying capital gains taxes and instead reinvesting that money so that they have increased buying power. 1031 Exchange Properties have strict requirements for an investor in order to defer paying capital gains taxes. The IRS mandates that a 1031 exchange real estate transaction occur within 180 days from the close of the relinquished property. Additionally, the IRS requires that the potential 1031 exchange properties be identified within 45 days from the closing of the relinquished property. 100% of the funds from the proceeds of the sale of the relinquished property must be reinvested into 1031 exchange properties and the title must be held in the same form as it was in the relinquished property. As real estate investors consider selling their current holding investment properties the following are several terms with which they should be familiar as they consider using 1031 Exchange Properties:

• Relinquished Property: The old investment property is frequently referred to as the relinquished property.



• Replacement Property: The new 1031 exchange real estate property is referred to as the replacement property.



• Like-Kind Property: The replacement property must be of like-kind or greater value in order to qualify as 1031 exchange properties.



• Qualified Intermediary: The IRS mandates that independent Qualified Intermediaries handle 1031 real estate exchange transactions. The Qualified Intermediary must be an independent party, and not a lawyer, broker, accountant or employee of the real estate investor.

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