1031 Exchanges Open Many Opportunities for Investors
For over 85 years, taxpayers have taken advantage of a tax strategy referred to as a 1031 exchange. Section 1031 of the Internal Revenue Code allows the deferral of gain on the sale and purchase of property held for use in a trade or business or for investment. Most taxpayers that take advantage of 1031 exchanges have one objective: avoiding the tax now. Unfortunately, many do not realize the many other benefits of an exchange.
When selling a property held for use in a trade or business, the seller must pay capital gain tax on all property appreciation. Many know the maximum capital gain tax rate for assets held more than twelve months by an individual is 15%, but few realize that you must also recapture all depreciation taken on the property at a flat rate of 25%. If the asset was held for a long period of time, the depreciation recapture can create a significant tax liability. A 1031 exchange will not only defer the capital gains but also the depreciation recapture. Learn how you can benefit from a 1031 exchange.
Benefits of 1031 Exchanges
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1031 CORP. Advantage Serving as a nationwide qualified intermediary for 1031 tax-deferred exchanges since 1991, 1031 CORP. strives to provide a superior exchange experience for our customers and their advisors. We provide our customers with enhanced security of funds, knowledgeable exchange professionals and commitment to keep the exchange process simple for our customers and their advisors. Every member of our exchange team is a Certified Exchange Specialist® and has the experience and expertise to facilitate even the most complex transaction. Learn more about why 1031 CORP. is the superior choice in 1031 services. |
Reverse Exchanges Make the Impossible, Possible
Most taxpayers now know about the benefits of tax-deferred exchanges allowed under section 1031 of the Internal Revenue Code but many don’t know about reverse exchanges. A reverse 1031 exchange is a strategy used when an investor intends to acquire the replacement property prior to conveying title of the relinquished property to a buyer. The most common situations that lead to a reverse exchange are as follows:
- The investor must settle on the replacement property or lose substantial down monies and/or favorable financing.
- Contingencies on the sale of the relinquished property have not been removed.
- A buyer for the relinquished property has not been found or falls through at the last minute and the closing on the replacement property cannot be postponed without jeopardizing the transaction.
Reverse exchanges truly help make the impossible, possible. Learn how to preserve your ability to 1031.
1031 Exchanges Are Not Just for Real Estate
When most people think of 1031, they only think of real estate exchanges. While a large number of exchanges are of real estate, it is also possible to exchange tangible and intangible assets for business use or investment. Exchanges involving personal property can include equipment, aircraft, gold, paintings, livestock, radio or television station assets and/or broadcast rights, delivery routes, franchises, furniture and fixtures, mineral, gas or timber rights, etc. While most of the regulations are the same in real estate or personal property, the main difference is the definition of like-kind property. Read more about personal property exchanges.
