Real Estate, Tax Issues, Tax Services, Tax Services - Business, Tax Services - Individual, Uncategorized

What is a 1031 Exchange?

What is a 1031 exchange? A 1031 exchange is something that anyone who owns multiple pieces of business property will want to consider. A 1031 exchange is one of the more complicated procedures available for real estate investors; It is always recommended to consult a CPA to ensure that all IRS regulations are being met. The simple premise behind a 1031 exchange allows a property owner to roll their proceeds from one investment property into one or more similar investment properties. Why is this such a big deal though? This allows you to defer paying taxes on the gain, instead using that money to purchase larger investment property. A financial intermediary is used to conduct the transaction so the taxpayer, technically, never receives the funds. There are specific guidelines for the time period in which a 1031 exchange can be conducted. A 1031 exchange will only be useful for taxpayers that own business or rental property. A personal residence is not applicable for an exchange.

If you are interested in selling or upgrading your business or rental property and would like more information on a 1031 exchange transaction please contact theĀ CLloyd Group.

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