The Secrets Of Real Estate Selling: All About 1031 Exchange Rules And Its Power To Save Money When Selling A Property
Did you know that you can still make more money from the property you are selling besides what the buyer is going to pay? This is through the help of the 1031 exchange rules yet you cannot just avail the terms you have to comply a set of requirements.
First and foremost, what is 1031 exchange rules?
Section section 1031 of the IRS tax code covers the 1031 exchange rules which allow investors to defer paying any capital gains taxes on the proceeds of the sale of real estate. This is if the profits are put towards the purchase of a “like-kind” property.
To know more about the ways of 1031 exchange rules, keep reading.
Get to know the 1031 exchange types to find the ones that suit you better.
Deferred exchange is when a property is sold first then a new one is bought after an ample amount of time, click here to learn more about this exchange.
In reverse exchange it covers the process of buying the replacement property first then selling the current property after, view here for more details.
A simultaneous exchange happens when the property is immediately exchanged for another, find out more about it.
You must take into considerations the rules governing how the 1031 exchange happens. Among of these is the prohibition of using the same exchange from the previous years and acting as your own facilitator.
What is the coverage of the 1031 exchange rules?
The maximum limit of properties for the 1031 exchange rules is three.
With a lot of investment you will be assured at least one goes through successfully. There is only a limit of three and you must be able to close at least one of those.
For you to qualify on the terms the property that must be sold should be an investment one.
You must be aware that you have to pay the tax of the original profit as well as the additional gain for the new one. You can learn all about the ins and outs of 1031 exchange rules here.
It cannot be denied how 1031 exchange rules can become quite complicated that is why you must not learn it all on your own but rather have a tax associate to help you. They would provide you with the necessary details about 1031 exchange rules and what you need to know.
Feel free to share this information with your friends or family who is looking to sell their real estate property.
Make sure that you know how to sell your property for starters, learn more details about it here.