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How Long Does a 1031 Exchange Need To Be Rented?
A 1031 exchange allows you to enjoy tax-deferral benefits as you reinvest proceeds from a property sale into another like-kind asset. However, the IRS does require you to hold the acquired property for business or investment use. This rule can impede people who may want to convert their assets later, such as turning a rental property into their primary residence. In this blog post, Realized 1031 discusses how long a 1031 exchange needs to be rented to maintain your tax-deferred status and avoid IRS scrutiny.
Can You Pull Equity Out of a 1031 Exchange?
Undergoing a 1031 Exchange is a strategy for investors who want to defer their capital gains taxes. However, there are those who may consider pulling out equity from the 1031 Exchange funds for various reasons. As such, it’s common enough to question whether or not you can take out equity from this transaction. The answer is nuanced, but this practice is indeed possible. This article examines the regulations governing this action and provides guidance on how to remain compliant. Keep reading to learn more.
How a 1031 Exchange Works With Tenancy-in-Common Ownership
If you’re seeking to grow your investment portfolio while deferring capital gains tax, a 1031 Exchange is a widely used strategy that allows for the reinvestment of proceeds from the sale of investment real estate into like-kind property, provided IRS requirements are met.
What is the 75% Guideline in a 1031 Exchange?
Executing a successful 1031 Exchange requires investors to be well-informed about several complex IRS rules to preserve the exchange’s tax-deferred benefits. One important rule is the “substantially the same” requirement. IRS regulations require that the replacement property ultimately acquired must closely match the property identified during the 45-day identification period in terms of nature, character, and sometimes location. While there is no formal IRS rule requiring acquisition of a specific percentage of a property’s value, some industry participants use an informal 75% guideline — suggesting that acquiring at least 75% of an identified property’s value may help demonstrate substantial compliance. This guideline may be a helpful reference point when structuring your exchange, but full compliance depends on the specific facts and circumstances of each transaction.
Can a 1031 Exchange Be Used for Rental Property?
A 1031 Exchange is a popular investment strategy that allows you to swap like-kind properties to defer taxes on capital gains. The IRS has strict rules regarding which types of properties are allowed, so it’s natural for investors like you to wonder whether or not the assets you own are applicable. Rental properties, in particular, are a common inquiry because of their ubiquity in investment portfolios.
How Crowdfunding for a 1031 Exchange Works
Choosing a replacement property in a 1031 exchange plays an important role in shaping the direction of your investment going forward. For the majority of investors, the most straightforward method is exchanging another property and gaining direct ownership of it after closing. However, this strategy may be too limiting for some.
1031 Exchange Realtors: Understanding Their Role In Real Estate Investments
Realtors can play a valuable role in property transactions, especially when it comes to navigating the complexities of a 1031 exchange.
Why Was The Delaware Statutory Trust (DST) Formed?
Delaware Statutory Trusts or DSTs are an attractive investment strategy for many investors, offering benefits like passive income, fractional ownership, hands-off involvement, and tax deferral through 1031 Exchanges. Why did it become popular in the first place? Why was the Delaware Statutory Trust formed?
Delaware Statutory Trust (DST) Financing for 1031 Exchanges
Financing may not seem necessary in a 1031 Exchange since you’re theoretically reinvesting all the proceeds of a property sale into a Delaware Statutory Trust (DST). However, various scenarios in real life can create the need for financing. This article provides an overview of these options to help you understand the more common DST financing approaches. Let’s dive in.
Important Things to Know About Wash Sale Rules
Gains and losses are part of investment activity. While the IRS taxes your capital gains, you could use the capital losses to offset taxable income, provided you're not triggering the wash sale rule. Unfortunately, many investors unwittingly trigger the wash sale rule when they reinvest dividends or rebalance portfolios after selling at a loss.
