1031 Tax Exchange
A 1031 exchange, also known as a like-kind exchange, is a powerful tool and strategy used to defer capital gains, state, and income taxes on real estate property. It is governed under IRS code 1031 and allows taxpayers to exchange an investment property for another. As mentioned, tax consequences of the sale will be deferred. However, in order to successfully execute a 1031 exchange, or like-kind exchange, certain rules and stipulations must be met.
If you are located within the United States and are interested in gaining 1031 Exchange Advice, contact the Gourley Law Group in Snohomish, Washington today, at (360) 323-2885, to receive expert advice from one of our Tax-Deferred Exchange Lawyers.
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An experienced Snohomish, Washington 1031 exchange tax attorney can help guide you through the legal process and ensure that all goes smoothly. It is important to remember, in order to qualify for a 1031 exchange, the property that you plan to sell has to be replaced by another like-kind property. The IRS does not explicitly define what is considered like-kind, but the property that will be acquired under a 1031 exchange has to be real estate. For instance, you can exchange an apartment building for land. You can also exchange between buildings, raw land, strip malls, ranches, and houses. As long as the property is meant for investment purposes, it can qualify for a 1031 exchange.
A person who wants to exchange a property is known as an exchanger. Once an exchanger closes on a relinquished property, they must identify another real estate property within 45 days to replace the former property. The property that is meant to replace the previous property must be at least equivalent in value. After the initial 45 days, the exchanger has 135 days to acquire the replacement property; giving 180 days total to relinquish one property and acquire a replacement.
1031 exchanges can be extremely beneficial if done correctly. There is no limit to how many times you can do a like-kind exchange, and when done right, you’ll only have to pay taxes once you are ready to cash out on your property or properties. However, investors should be aware that there are traps to look out for when pursuing a 1031 exchange. It is wise to seek the professional assistance of a tax-deferred exchange lawyer to help you avoid any pitfalls. A 1031 exchange misstep can result in loss of money, as well as unwanted tax implications.
There are several ways of accomplishing a section 1031 tax free exchange of real property, fitting for various circumstances. It is not advised to handle this type of process alone, especially if it is your first time dealing with a like-kind exchange. It is best to consult with a 1031 exchange attorney to determine the best course of action for your investment purposes.
To speak with a top 1031 exchange lawyer, contact the Gourley Law Group in Snohomish, Washington. We are a team dedicated to serving our clients with their 1031 exchange legal needs. We’ll be happy to talk to you about any questions or concerns that you may have about the 1031 exchange process.
Read a helpful article about Escaping the Crazies through 1031 by B. Craig Gourley, published on Rental Housing Journal On-Site November 2019
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