Why All 1031 Exchanges Are Not Tax-Free —- Here’s How to Avoid an Unhappy Surprise
If your plan is to complete a 1031 exchange that results in no tax being paid, then you need to understand the target value of the replacement property you must acquire. This may sound simple, but in practice, it trips up many investors—leaving them with tax to pay. Before we delve deeper into how to […]
1031 Strategies: Refinancing Around An Exchange
For investors, one of the main reasons to use a 1031 exchange is deferring any tax due so that any return they earn can be on all of their equity going forward. For the gain deferral to be maximized, the exchange rules require that the purchase price of the replacement property be the same or […]
1031 Strategies: Converting Investment Property into Your Dream Retirement Home
A number of investors own both a primary residence and an investment property or two. They often have an interest in selling one and transitioning into the other, while limiting the tax liability through smart tax planning. While the IRS has issued direct guidance on this subject, there is still confusion among many investors about […]
Top 10 Reasons to 1031 Exchange
#10 To consolidate or diversify real estate investments. By selling multiple properties and buying one larger replacement property, you lessen management responsibilities and may also be able to geographically consolidate property. For those investors who own one larger property, exchanging can allow them to sell and diversify into other types or locations without having to […]
1031 Tips: Being Brilliant at the Basics
Just like in baseball, when planning for a 1031 exchange, understanding certain basics will help you have a successful turn at bat. Being brilliant at the basics will help you hit a home run. With a 1031, your success primarily hinges on having a basic understanding of this transaction and paying attention to certain key factors. To […]
What Qualifies for 1031? Investment Property v. Inventory
When it comes to qualifying for a 1031 exchange, not all investment property is created equal. IRS Code Section 1031 allows the exchange of property that is “held for investment.” Within this context, the meaning of the phrase “held for investment” is very specific. Property held for investment does not receive the same tax treatment […]
Info to Go: The 1031 Like-Kind Requirement
There are several elements that must be satisfied in order to qualify for the tax deferral that a 1031 offers. One requirement is the property being sold and the property being acquired must be “like-kind”. Despite the increased number of 1031 exchanges being done, this topic is still one of the most misunderstood aspects of exchanging. […]
Why Can’t You Send Me My Money?
The 1031 process has a number of rules and regulations critical to its success. By using the services of a qualified intermediary, most exchangers are blessedly unaware of a number of them as the needed documents have already been crafted and tailored to abide by the rules. However, frustration can arise when exchangers misunderstand the […]
Relation Complication: 1031s with Related Parties
One question that often arises in our conversations about 1031 exchanges is if related parties can play a role. Often, exchangers want to know if they can sell to or buy a property from a family member, related entity, or trust that they control and still have a valid exchange. In a standard 1031, the taxpayer […]
Top 1031 Do’s and Don’ts
There are many details and nuances to consider when doing a 1031 exchange. We thought it might be helpful to address the most common do’s and don’ts that customers face in successfully executing and maximizing the tax benefits of a 1031 exchange. Here is a list of the most common advice we give to the questions […]