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.
The Ins-and-Outs Of A 1031 Exchange
The IRS doesn't have hard and fast rules on how long you have to keep a purchased property as income-producing and thus are able to use a 1031 exchange. Some say the safe route is holding the property for two years and others say you can change your mind and make a home your primary residence and use a 1031 exchange.
Subdivide Property Using 1031 Exchange
Property owners may subdivide their property and sell the portion they do not live on using a 1031 exchange. A 1031 exchange allows property owners to defer taxes on the sale of property, but you must purchase a different investment property for at least the same price as the property you are selling. Find a good real estate attorney to help you properly subdivide property and sit down with an accountant to ensure you can take advantage of tax benefits from a 1031 exchange.
1031 Exchanges to Avoid Capital Gains Taxes
To avoid paying capital gains taxes, you are permitted to sell one property in exchange for another in a 1031 exchange. A 1031 Exchange or Starker Trust exchange or "like-kind" exchange are all terms used to describe the sale of one investment property for another. When you undertake a 1031 Exchange you generally need a third party to act as an intermediary in the transaction and as the trustee for the money received from the sale of the property.
Use 1031 Exchange To Defer Capital Gains Tax
When you sell your current investment property and purchase another property that costs at least as much, you can defer all capital gains tax if you use a 1031 exchange. A 1031 exchange offers tax-free real estate transactions, but there are some important rules to keep in mind.
1031 Exchange Can Help Swap Rental Properties
A rental property owner considers selling property to buy a building closer to home. Having rental property so far away is risky because you can't check on how the property is being maintained. A 1031 exchange can help this investor sell his rental property for a new one and defer taxes.
1031 Exchange: IRS Rules For Investment Property Purchase
A father wonders if he can do a 1031 exchange and rent back the newly purchased investment property to his struggling son. Sam discusses the details of the 1031 exchange commonly known as Starker trusts, the IRS rules behind them and how they apply to investment property. One key point: a good real estate attorney will help you navigate the IRS tax rules about a 1031 exchange and how it applies to investment property.
Rental Property Owner Uses 1031 Tax Free Exchange
A rental property owner wants to purchase property closer to home without paying too much in capital gains taxes. The only way to completely defer paying capital gains tax on your property is to do a 1031 tax free exchange, also known as a Starker Trust. There are specific rules, regulations and time issues involved when using a 1031 exchange to defer capital gains taxes.
Benefiting From The Starker Trust
Rental properties fall under the category of investments. There are two kinds of investments -- long-term investments, which are investments you have held longer than a year and short-term investments, which are those you buy and sell within a 12-month period. When you sell a long-term investment, you have capital gains taxes to pay on any profit.