What is a 1031 Exchange?
Internal Revenue Code Section 1031 provides that no gain or loss will be recognized on the exchange of any type of business use or investment property for any other business use or investment property. 1031 Exchanges are not really exchanges in the context of two-party barter. Instead, they are typical sales and purchases that involve the same ingredients as any other sale or purchase, without the capital gains. The only real difference is the investor is increasing his selling and buying power by defering the captial gains tax under Section 1031 regulations. No other aspects of the transaction are affected.
Anyone selling a business or investment property should consider a 1031 Exchange. An Exchange offers the astute investor an opportunity to reinvest the federal capital gains that would normally be handed over to the IRS and put that money to work for himself. You work too hard to simply pay the tax without carefully considering this reinvestment option.
1031 FAQ
- What is Internal Revenue Code Section 1031?
- What is 1031 Like Kind property?
- What is IRC Section 1034 property?
- Why exchange property instead of just selling it?
- When is a 1031 Tax-Deferred Exchange applicable?
- What is the current identification period and closing time?
- What happens to the money?
- What happens when the exchanger obtains a new loan from an Institutional Lender?
- How do I sign up for an exchange with 1031xchange.com?
- How does 1031xchange.com get compensated?
- What if my debt and equity requirements aren't enough to purchase a property or properties?
- Can I take cash out of a 1031 Exchange?
- When is the best time to notify related parties about the intent to transact a 1031 Exchange?
- Can I close my replacement property before selling my relinquished property to the new buyer?
- How do I report my 1031 Exchange to the IRS?
- If I already signed the sale contract, is it too late to exchange?
- What is needed when the exchanger is a partnership, corporation, or trust?
- What is a qualified intermediary?
- What is Boot?
- What is Tenant In Common?
