1031 EXCHANGES

A 1031 exchange is a way to defer potential income and recapture taxes. Normally when you sell property, you must recognize a gain or loss in that transaction If it is a gain, it is subject to tax (Federal capital gains tax, potential State income tax, and potential depreciation recapture taxes). If you comply with the requirements of Section 1031 of the Internal Revenue Code (IRC), however, you can defer, and possible avoid, those taxes. IRC §1031 states: "No gain . . . shall be recognized on the exchange of property held for productive use in trade or business or for investment if such property is exchanged solely for property of like kind . . ." The concept is simple: If you put all of the proceeds (and profits) from the property that you are selling into the property that you are buying, your tax liability is deferred. There are strict dates and timelines for doing a 1031 and you must use a Qualified Intermediary (also called an "Accommodator") to accomplish the transfers on both properties and to hold the funds. If, however, it is your goal to continue investing in real estate, you will have more money to invest in your replacement property if you go through a 1031. Finding investment property is not unlike finding your home. There are ads in newspapers, for sale signs on property (sometimes), and properties are advertised on the internet. If you are not going to give up your day job, and spend your time running all over town, hiring a real estate broker from Porter House Realty to look for properties for you is your best bet. The investment market is filled with aggressive individuals and companies buying and selling property, and unless you can devote the time to continually search for the right investment opportunities for you, hire Porter House Realty, and we will. Investment Strategies >>>   Investment Analysis >>>   Property Management >>>   Separate Entity >>>   Financing >>>   Selling your Investment Property >>>   <<< Back