1031 In a Nutshell
a 1031 Exchange?
ask, “Why should I do a 1031 exchange?” I
can answer this question in two words: "Financial
Leveraging." By doing a 1031 exchange, the taxes
you would have paid to the government are now working
to earn you money.
by Kim Bicket for
the 1031Exchange Experts, LLC.
A 1031 exchange allows a taxpayer to
postpone their long-term capital gains tax when selling
an investment property by exchanging both the basis
and the gain into a new investment property. This gives
an investor financial leverage. If you have a property
used for investment or business and you plan on buying
another property used for investment or business, then
yes, you need to do a 1031 exchange.
It doesn’t matter what the long-term
capital gains tax is at the time. Why pay more taxes
when you don’t have to? Even the IRS agrees!
That’s why they created a 1031 tax code. It doesn’t
make sense to tax an investor on money they never actually
received. And why not encourage investors to reinvest
in the American real estate market? It is a Win-Win
property I own qualify for a 1031 exchange?
There are five types, or ‘tax
classes,’ of property:
- Property used in a trade or business
- Property held for investment
- Property used as a vacation home
- Property held primarily for sale
- Property used as your primary residence
Properties that fall into the first
three categories qualify for a 1031 exchange. Keep
in mind that vacation homes used solely for personal
use do not qualify; only those vacation homes that
are being used as rentals for the majority of the year
qualify. “Fix-and-flippers” beware: properties
held for the sole purpose of selling them in the immediate
future will not qualify for a 1031 exchange. 1031 exchanges
are not designed for Dealers, Developers or Fix-and-Flippers.
And no, you cannot 1031 your primary residence, unless
you make it a rental for one year and one day before
you sell. Then you not only get the tax benefits of
selling a primary residence, but section 1031 as well!
You get TWO tax advantages in one sale!
by getting a contract on your investment property
Ask to speak with a consultant
here at The 1031 Exchange Experts
Send us your Title Company
Inform your Realtor®
Contact your CPA let them know
what you are doing
Sit back and let us do the
Our 1031 consultants and coordinators
will work closely with you, your Title Company, your
Realtor, and your CPA to make sure that you not only
get the real deal, but the best customer service in
the industry. We don’t mess around with your
money or your time. We guarantee that you get segregated
accounts (not just ‘segregated accounting’),
and we won’t let you miss your 45- or 180-day
We’ve got your back from start
to finish. And here’s the best part: The 1031
Exchange Experts is owned by Gary Gorman, author of “Exchanging
Up!” and the “Six Things You Need To Know
About 1031 Exchanges.” Not only do we hold ourselves
to the highest standard, but the industry does as well.
After all, we... ‘Wrote the book on 1031
But enough about us.
What can we do for you?
Nationwide, toll-free: 866-694-0204