1031 Exchange    

1031 Exchange Explained

1031 Exchange Explained

Irs 1031 Tax Code allows a property owner of investment rental property to exchange rental property and defer paying federal and state capital gain taxes (20%+ applicable state taxes) in the event that they purchase a like-kind rental property. A tax-deferred exchange is a method by which a property owner trades one or more relinquished rental properties for one or more replacement rental properties of like-kind, while deferring the payment of federal income taxes and some state taxes on the transaction. The theory behind IRS 1031 tax code is that when a property owner has reinvested the sale proceeds into another rental property, the economic gain has not been realized in a way that generates funds to pay any tax. In other words, the taxpayer’s investment is still the same, only the form has changed (e. g. vacant land exchanged for apartment building). Therefore, it would be unfair to force the taxpayer to pay tax on a paper gain.

Contact a specialist today for a more thorough explanation and for advice relating to your personal circumstances.

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Tenant in common (TIC) properties have become popular 1031 exchange solutions for investors seeking to defer capital gains taxes and free themselves from property management. A wide range of TIC properties exist for sale and ticcommercialrealestate.com can provide you with access to the best TIC investment opportunities nationwide.

  • Single and Multi-Tenant Office Buildings
  • Multi-Family Apartment Buildings
  • NNN-Triple Net Lease
  • Industrial Complexes and Warehouses
  • Retail Shopping Malls
  • 1031-REITS (Real Estate Investment Trusts)
  • Oil and Gas Royalties

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    Monday, March 15, 2010