Partial 1031 Exchange Rules You Need to Consider
When performed successfully, the 1031 exchange process can help you trade your real estate property into another one of greater or equal value and allow you to potentially defer capital gains and depreciation recapture taxes.
What 1031 Exchange Expenses are Added to Basis?
When it comes time to sell real estate you might use for business or investment, you could defer capital gain and depreciation recapture taxes with help from 26 U.S. Code § 1031 – “Exchange of Real Property Held for Productive Use or Investment.” When you follow the IRS rules for a 1031 exchange, you “swap” real estate you currently own (relinquished property) into different real estate (replacement property).
Can a 1031 Exchange Include Renovations?
The 1031 exchange can be useful as a real estate tax-advantage strategy. If you exchange your relinquished property for a replacement property of equal or greater value within the IRS deadlines, you could defer capital gains and depreciation recapture taxes to a future date.
1031 Improvement Exchange Rules: What You Need to Consider
A 1031 improvement exchange is like a traditional 1031 exchange with improvements added to the exchange. With a traditional 1031 exchange, investors will find a property of at least equal value to exchange. These properties are often turn-key and don’t require big improvements.
Do You Have to Recapture Depreciation in a 1031 Exchange?
Real estate investments can generate many benefits, not the least of which is property appreciation. This means that when you sell that appreciated property, you could realize a profit from that sale. One potential downside could be capital gains taxes. Another is depreciation recapture taxes.
How Long Can You Wait to Do a 1031 Exchange After the Selling of Farmland?
A successful 1031 exchange process requires strict adherence to deadlines and an understanding of regulations. One example is exchanging your relinquished property for a replacement property (or properties) of equal or greater value.