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The IRS offers a considerable tax advantage to real estate buyers who reinvest the proceeds of a sale into the purchase of "like-kind" property and defer the capital gains taxes. Sounds simple enough, but it can be a very complicated procedure if you are not familiar with the seemingly endless rules and regulations.
The 1031 exchange program requires strict compliance with all of the Internal Revenue Service's requirements and time limits in order to be able to successfully defer paying capital gains and depreciation recapture taxes. You may be confused about some of the terms you hear in regard to 1031 exchanges and what they mean, such as "like-kind", TIC or Tenant In Common, Qualified Intermediary, and so on. Helpwith1031.com strives to provide you with basic, "in plain English" explanations and links to knowledgeable resources and up-to-date information.
Now, as with anything related to the IRS, taxes and your financial future, we strongly advise you to consult with your trusted tax attorney or accountant when it comes to making the proper choice for your situation. This is a reminder that you will continue to find throughout our web site.
So what are the basic requirements of a 1031 exchange? One of the primary requirements of the IRS is that 100% of the money from the sale of the investment property must be reinvested into the new like-kind property in order to be eligible to defer capital gains taxes. The exchange is also subject to a time limit of 180 days to complete the purchase of the new property, however the property to be purchased must be identified within 45 days of the sale of the old property. The IRS also requires that the transaction be handled by a Qualified Intermediary, who handles the required paperwork and funds involved in the sale and subsequent purchase. There are also requirements as to how title is held in both transactions.
Helpwith1031.com provides access to articles, tips, and other information to help you discover the benefits of 1031 Exchanges.
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