IRS Code 1031 allows for an investor of real property to defer his capital gain upon the exchange of investment property of a like kind. In other words, you can trade an existing property for a new property or properties without having to pay taxes on your gain. The tax liability is deferred into the new property.
If you own an investment property which has served its purpose and you would like to upgrade to a more profitable property, a 1031 Exchange should be of interest to you. Hypothetically, say you own a rental property which you purchased in 1995 for $100,000.00. Now you found a property you would rather own. Due to appreciation, your old property has gone up in value and is now valued at $125,000.00. Under normal circumstances you would need to pay taxes on your capital gain when you sell the old investment property.
Not so if you do a 1031 Tax Deferred Exchange. You do not pay capital gain at the time of sale, but you defer the capital gain. The advantage is that you can use your $25,000 in capital gain to purchase a more suitable property.
In short, the advantage of a 1031 Exchange is that you can defer your capital gain until the end of your life, as long as you do not sell your investment property out right. And you can do multiple 1031 exchanges over the years and keep deferring your capital gain until you either pass away or finally sell your investments and do not continue buying other investment properties.
I would be happy to help you set up a 1031 tax-deferred exchange in the Las
Vegas, Nevada area as well as
explain the steps necessary for your particular exchange. Although I do not give
specific tax advise, I do give free consultations. Please call me with
your questions.
Back to 1031 Exchange Main Page
Millie Fine
CENTURY 21 Aadvantage Gold
Toll Free 1-888-449-FINE
Home office 1-702-363-5599
E-Mail Millie!
millie@milliefine.com
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