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How to Identify a Replacement Property for a 1031 Exchange
The idea behind 26 U.S. Code § 1031 – “Exchange of Real Property held for Productive Use or Investment” – is that the investor can trade relinquished real estate for properly identified as replacement real estate to benefit from a capital gains tax deferral.
Can You Combine a Reverse and Forward 1031 Exchange?
For many real estate investors, the primary objective of completing a 1031 exchange is to defer capital gains taxes generated from the sale of their investment properties.
Can You Exchange One 1031 Property for Two?
Selling an investment property can bring about many difficult decisions.
What is the Napkin Test?
Legendary California real estate attorney Marvin Starr likely had no idea when he snatched up a paper table napkin during a real estate seminar to jot down some quick 1031 exchange math that he was pioneering the most simple method of determining an exchangor’s financial position in a potential exchange.
What is a 1031 Exchange Addendum, and How Does it Work?
Many 1031 exchange contracts have all the necessary language to complete the exchange. However, there are times when modified or new language must be introduced after the fact. This article will look at a few scenarios where a 1031 exchange addendum is needed.
Can You Sell Multiple Properties in a 1031 Exchange?
There is nothing special about selling multiple properties in a 1031 exchange (also called a forward exchange). However, it can be more difficult than a single property exchange. Compared to a single property exchange, there can be more properties and people involved. This means far more to juggle and maintain, all while trying to beat deadlines. Let’s walk through what this type of transaction might look like.
Does Depreciation Restart after a 1031 Exchange?
When investors do a 1031 exchange, their basis carries over into the replacement property. They are also able to continue taking the annual depreciation expense. But does the depreciation restart or change from the existing schedule once the replacement property is acquired?
How to Report a Reverse 1031 Exchange on a Tax Return
Reporting a reverse 1031 exchange on your tax return doesn’t require too much work above a regular 1031 exchange. However, if you have done more than one reverse 1031 exchange, you’ll need to file forms for each one, which can certainly add to your workload at tax time.
What Can You Buy With a 1031 Exchange?
A 1031 exchange is an investment and tax tactic that gets its name from Section 1031 of the Internal Revenue Code. The execution of a 1031 exchange may allow a taxpayer to defer recognition of capital gains taxes when they sell an investment property and reinvest the proceeds into another asset. The rules are strict in some ways, such as the timeline, but generous in others, such as regarding what properties the taxpayer can exchange.
How Does a 1031 Exchange Work with Seller Financing?
Seller financing is a common practice in real estate transactions. In this unique form of lending, the seller of an investment property also functions as the buyer’s mortgage lender.
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