|Rick Lorenz, ABR, CRS and his team||
|Many people are not aware of the benefits that a 1031 tax
deferred exchange can
provide when you sell real estate other than a primary or secondary residence.
A 1031 exchange is available for any investment property that you own and is especially relevant if, when you sell it, you would make a large profit. The
word "exchange" is pretty much a misnomer anymore, as you do not really need to "exchange" your property for someone else's property. As a seller, your ideal
buyer is one who is going to pay you all cash (or cash plus the proceeds from a new
loan.....which is the very same as all cash to you). Under the 1031 rules, the closing company would give the
proceeds of the sale to a "qualified intermediary " who will hold them until other investment property can be selected to buy. The IRS rules require that you acquire "like
kind" property in order for the transaction to be a valid exchange.
would need to "designate" what you are going to buy within 45 days of closing and then actually
close on the purchase within 180 days of closing. There are additional rules to be
followed, but generally speaking, so long as you spend at least as much as what you sold
your other property for, you will not have taxes owed due to the sale.
Like Kind Property