Property Exchange
Save
Money By Deferring The Capital
Gains Tax On The Sale Of Your Property!
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(Listen Here 4:23 min)
Section 1031 is a very powerful provision!
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It says, "no gain... is recognized" on the transfer of QUALIFIED 1031 PROPERTY, which is property that has been held for "use in a trade or business" or for "investment purposes" that is exchanged for new like-kind business or investment property. |
This means you can structure your sale to be tax-free - by indefinitely deferring your capital gains tax!
Notice that the regulation says that the exchange has to be of "Like-Kind" property. Properties are considered to be like-kind, if they are of the same nature or character, even if they differ in grade or quality. This is very broadly applied to nearly all real property in the United States.
For example, you can exchange a farm for an apartment building - and yes, they are both considered like-kind because they are both REAL ESTATE. Likewise, industrial or commercial real-property can be exchanged for residential real-property. Note that real property in the United States and real property outside the United States are not considered like-kind.
Personal properties (non-real estate; chattel; movable items that are not affixed to the land or buildings) may qualify if they are either like-class or like-kind. For more information see "personal property exchanges" under 1031 Like Kind Exchange.
Interestingly,
livestock of different sexes are not considered like-kind.
Personal property used predominantly in the United States and personal
property used predominantly outside the United States are also not
considered like-kind.
IRC Section 1031(a)(2) excludes the following property from 1031 treatment:
| (A) Stock in trade or other property held
primarily for sale; (B) Stocks, bonds, or notes; (C) Other securities or evidences of indebtedness or interest; (D) Interests in a partnership; (E) Certificates of trust or beneficial interests; (F) Choses (right or claim of suit) in action. |
Vacation homes, second homes and property that is used primarily for personal-use, is also EXCLUDED from Section 1031.
As you can see - a 1031 exchange is extremely useful for the right type of property - but can be somewhat complicated - so be sure utilize a qualified intermediary to ensure the success of your tax-free transfer.
Nation Wide Tax-Exchange Services:
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Call Me Directly (Toll Free) At 1-888-308-1031 For A Free Consultation - Or Click Here
To Start Your Exchange Online Today! |
