1031 Exchanges - The Legal Way To Defer Investment Property Capital Gains Tax

With the booming property prices of recentinvestment properties.1031 exchanges must be
years, more and more people are findingcompleted within strict time limits. There is a 45
themselves facing a large tax bill when they comeday Identification Period from the transfer of the
to sell their investment properties. However, didold property, in which a replacement property
you realize that there is a perfectly legal way ofmust be identified. The 1031 exchange rules
deferring payment of such taxes by utilizing thestipulate that the exchange must be completed
advantageous 1031 tax code that was introducedwithin the 180 day Exchange Period.The 1031
by the IRS in the early 1990s?A 1031 exchange isexchange real estate issues are complex, so it is
a way of deferring payment of capital gains taximperative to seek professional advice from a tax
on certain types of real estate. Normally when anadvisor or qualified intermediary who can assess
investment or business property is sold, capitalyour specific circumstances and explain other
gains tax has to be paid. However, with 1031issues such as the reverse 1031 exchange or TiC
exchanges, by replacing the old property with arules. With careful financial planning, you can
like kind property, within set time limits, paymentreinvest your capital gains in future real estate
of capital gains tax can be avoided.Under the 1031investments, thereby allowing you to leverage
exchange real estate rules, a seller must haveyour money more efficiently and to reap greater
held a property for at least one year and a dayfinancial benefits.Caroline Smith is a regular
for it to qualify. Another requirement is that bothcontributor to 1031.ws - an online resource all
old (relinquished) and new (replacement) 1031about 1031 exchanges, including information on the
exchange properties must be of a likekind - either1031 exchange rule and the requirements of a
rental properties, vacant land, trade, business or1031 tax exchange.