Introduction
A tax-deferred exchange that complies with the guidelines of the Tax Reform Act of 1984 allows you to preserve your wealth through reinvestment in "like-kind" assets. A well-planned exchange can achieve a variety of investment objectives and is a powerful tool that can work to most real estate investor's financial advantage.
When you sell your interest in investment property, you may incur federal capital gains taxes and, in some states, state taxes as well. Your attorney, tax adviser, or real estate professional may suggest a tax-deferred exchange under Section 1031 of the Internal Revenue Code. A tax-deferred exchange allows you to dispose of investment properties and acquire "like-kind" properties while deferring federal capital gains taxes. Most states with a capital gain tax offer a similar tax advantage as well. Bottom line, a tax-deferred exchange allows you to reinvest sales proceeds that would otherwise be paid to the government in the form of taxes.
Knowledge is the Key to a Successful 1031 Exchange
Please read all of the exchange documents referenced in my Web Site´s 1031 section before moving forward with this investment strategy. As a Licensed Real Estate agent I cannot provide or even remotely imply that I am providing tax or legal advice. This content has been evaluated and gathered by me simply as a courtesy to my web site users. Much of the content provided has been selected from two of my most highly recommended and e-savvy
Qualified Intermediaries:
1. First American Exchange Company
2. Asset Preservation Inc (API)
A thorough understanding of the §1031 IRC rules is critical to a successful exchange. As a cautionary note, investors should always seek the professional advice of their tax and/or legal advisor's regarding their specific financial scenario. (1) Qualified Intermediaries and (2) Realtors serve a critical role in the 1031 exchange process; however, the other essential members of a successful and stress free exchange are (3) an attorney experienced in 1031 exchanges, and (4) your personal tax consultant.
