Benefits of a 1031 Exchange
A 1031, tax deferred exchange allows businesses and individuals to defer taxes on capital gains associated with the sale of real estate or business assets. By deferring the taxes due on the sale of the asset, and re-investing this money into a new asset, investors can increase their leverage and returns, and thus create greater wealth over time.
By far the most popular type of real estate exchange is the delayed or “Starker” exchange. This involves the sale of one or more properties, and the purchase of one or more properties completed within the guidelines of section 1031 or the IRS tax code.
Per IRS guidelines, three things must occur to exact a successful exchange:
1) you must trade for like-kind property with equal or higher value;
2) you must re-invest all of the proceeds from the relinquished property;
3) you must trade up to equal or greater debt.
All of these steps must be completed within the 45 day or 180 day timeframes set forth by the IRS.
If you are contemplating selling or exchanging your investment real estate, The 1031 Exchange Gameplan can help you expand your investment opportunities, increase your real estate knowledge and avoid the potential pitfalls of an unsuccessful exchange.
If you would like more information, or if you would like to enroll in The 1031 Exchange Gameplan, please call or e-mail us at info@sapphirecapitalstrategies.com.
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