A 1031 exchange, also known as a Starker Trust, is used by a real estate investor who wants to sell an investment property he or she owns but does not want to pay any taxes. A 1031 exchange allows the seller of investment property to defer taxes by purchasing another property that costs at least as much as the property he or she is selling. There are very strict rules for using 1031 exchanges, and if you blog the deadlines or rules, the 1031 will not be valid. Typically, you’ll need a third-party company to hold your 1031 funds (you’ll want to choose this company carefully) and a real estate attorney that you hire to protect your interests. This topic page is the nerve center for hundreds of articles and videos about 1031 exchanges. These articles discuss the nuances of selling property tax-free using a 1031 exchange. You can use the topic cloud on the right navigation to further refine your search.
If you're doing a 1031 tax exchange on an investment property and you've found your replacement property but not yet sold your first property you'll want to do a reverse exchange. A 1031 reverse exchange allows the 1031 company to take title to the property until you sell it.
When you want to do a 1031 tax exchange for your second home you need to make sure that you're not using the home more than 14 or 20 days of the year. Learn more about 1031 tax exchange rules for second homes and check out our other 1031 videos at expertrealestatetipsl.net.
A 1031 tax exchange is named for part of the IRS tax code. A 1031 exchange allows you to defer paying taxes on investment property including real estate, artwork, helicopters, copyrights, patents and more. You cannot do a 1031 exchange on personal property. This video gives you basic information about a 1031 exchange. For more information, check out our other 1031 exchange videos.
When you do a 1031 exchange you don't want to receive or touch the money involved. That's why you hire a 1031 qualified intermediary who manages a restricted account where your money's trapped. If you don't use a qualified intermediary and touch the 1031 exchange money, you lose your chance to claim a 1031 exchange on your taxes. Learn more about a 1031 exchange qualified intermediary and why they're important.
When you do a 1031 exchange to defer taxes you have to choose replacement property that's similar or "like kind." The "like kind" property may not only be real estate but also timber, air, oil or gas rights. The tax payer must exchange like for like however. Learn more about "like kind" property and its role in a 1031 exchange.
When doing a 1031 exchange, how long do you have to acquire your replacement property? 180 days. But you have to pay attention to when you pay your taxes and if you want the full 180 days, time your acquisition accordingly. Learn about the 180 day rule for 1031 tax exchanges and how that time is calculated.
When you're doing a 1031 tax exchange, you need to know what a capital gain is. A capital gain is a profit on a capital asset. Capital gains tax is 15 percent on real estate. But if you're doing a 1031 exchange with another type of investment you'll likely pay your ordinary income tax rate on the capital gain.
When you're doing a 1031 tax exchange you need to follow three rules for identifying property. The three property rule allows you to consider three replacement properties without taking their fair market value into account. If you're looking at more than three properties for a 1031 exchange, you may be subject to the 200 percent rule or the 95 percent rule. Learn what these 1031 exchange rules are.
When you do a 1031 tax exchange it can save you capital gains tax and recapture depreciation tax. Taxes without a 1031 exchange can range 15 to 25 percent. They will be higher the more valuable your investment property or if you've claimed depreciation on the asset you're exchanging. Learn how to save money with a 1031 exchange.
When you hire a 1031 tax exchange company to help you exchange investment property you will pay some fees. 1031 exchange fees vary depending on the timing of the 1031 exchange. Fees will be higher for a 1031 exchange where the investor has acquired the new property before selling the old one. 1031 exchange companies factor risk into their fees.