What is a tax free 1031 exchange????
Would you like to save taxes dollars when you sell your investment property????
The law states " No gain or loss shall be recognized if property held for productive use in trade or business or for investment purposes is exchanged solely for property of the like kind". A " Like Kind Trade" is interpreted as any type investment property traded for investment property. If it is investment property, you can exchange land for improved property, rental house, shopping center, office building or the like. This tax law 1031 remains for taxpayers to take advantage of.
There have been several changes and clarifications since the law was passed in 1939. There are time limits and limits to the number of properties that you can change into. You may exchange out of one property and acquire up to three properties with no significant restrictions or you can exchange into more than three properties with special stipulations. You may exchange out of several properties into one property.
What causes taxes to be owed????
If the exchanger received boot or loan relief, the exchanger may have to pay taxes. Boot is anything of value that the exchanger receives that is not " like kind". Boot is cash, personal property, etc. If a loan on the property relinquished is larger than the loan or loans on the property you exchange into, this is considered loan relief. The amount of the difference is taxable. There are time limits. From the date you relinquish the title, (the property you give up) you have 45 days to designate the property or properties you intend to exchange into. You must close within 180 days.
What could you do??????
If you are thinking of selling your business or investment property, contact or e-mail me for a free consultation with a qualified exchange intermediary. With today's high taxes, a 1031 exchange can protect your profits. fees begin at $600.00 for a typical exchange.