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Executing a 1031 Exchange With Multiple Owners: What You Need to Know
Many ownership structures exist when it comes to owning real estate. There are single ownership, partnerships, and LLC arrangements. Then, there are multiple-ownership set-ups, like joint ventures or tenants-in-common (TIC).
What to Look for When Reviewing 1031 Exchange Property Listings
Let’s say you’re an investor with tangible real estate holdings. Perhaps you want to upgrade those holdings by acquiring higher-value (or higher cash-flow) real estate property. Or you might be tired of hands-on ownership and are considering exchanging that income-producing property into a Delaware Statutory Trust (DST).
Can I Do A 1031 Exchange After Closing?
It takes careful planning and strategic execution to successfully complete a 1031 exchange. The keyword here is planning — you must decide prior to divesting your investment property to do a 1031 exchange. If you sell your property in a straight sale, you’ll be left out of the 1031 exchange process.
Do You Have to Reinvest Everything in a 1031 Exchange?
A 1031 exchange refers to a section of the Internal Revenue Code allowing investors to defer the capital gains taxes when they sell an investment asset if they reinvest the proceeds from the sale. Using the tool, investors can sell a real estate investment property that has appreciated without paying capital gains or depreciation recapture if they reinvest the proceeds in a “like-kind” asset.
The Other DST – Deferred Sales Trust
Under the IRS ruling, a Deferred Sales Trust (DST) presents a feasible solution for controlling the timing of your capital gains tax payments, which can be particularly useful if a 1031 exchange doesn’t go as planned.
Can You Buy Raw Land With A 1031 Exchange?
When it comes to 1031 exchanges, a common question arises - can you conduct a 1031 exchange on raw land? The answer is definitively yes. Under Section 1031 of the Internal Revenue Code, it's entirely possible to exchange raw land for another 'like-kind' property, which could even be a rental property. It's crucial to remember, though, that properties for personal use, including your main home or vacation homes, don't qualify for a 1031 exchange. The purpose of this rule is to facilitate the reinvestment of business or investment properties, and raw land certainly fits the bill.
How Can You Calculate a Recognized Gain in a 1031 Exchange?
As we’ve mentioned in previous blogs, 1031 exchanges can come with many challenges. There are the in-stone deadlines, cost considerations, and paperwork, to name a few.
Selling 1031 Exchange Property: What You Need to Consider
Using a 1031 exchange to defer the payment of capital gains taxes on the sale of investment property is an attractive tool for many investors. Successful execution of the exchange will allow a taxpayer to defer paying taxes on the capital gain that an investment property has accrued. Naturally, the IRS is specific about what does and doesn't qualify for this favorable tax treatment. Taxpayers must judiciously adhere to the stipulations to reap the benefits.
Can I Buy a Property First and Then Do a 1031 Exchange?
Timing often plays an important role in the acquisition of commercial real estate, especially in competitive markets where properties may receive multiple bid offers from a pool of eager investors.
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