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Can You 1031 Out of a TIC?
Being a co-owner in a tenancy-in-common (TIC) can offer advantages, such as access to larger properties, but it may also introduce structural limitations. Investors seeking greater control or portfolio simplification may consider exiting a TIC interest. This raises an important question: can a TIC interest be exited through a 1031 exchange?
Using 1031 Exchanges for Succession Planning in Family-Owned Businesses
A family-owned business is often created with the goal of building a legacy and supporting future generations. However, succession planning can be a complex and sensitive undertaking. The stakes can be high, especially if real estate is part of your business’s assets. One strategy that may be used to defer capital gains taxes and align real estate holdings with long-term planning goals is the Section 1031 exchange.
Who Can Advise Me on a 1031 Exchange?
Undergoing a 1031 exchange is a tax-deferred transaction. While often utilized by accredited investors, it is open to a range of taxpayers who meet the criteria. The process includes strict timelines and compliance obligations, and even small errors can jeopardize the tax-deferral benefits. For this reason, many investors choose to engage qualified professionals who can offer guidance and help support compliance throughout the exchange.
Can You Do a 1031 Exchange on a Manufactured Home?
A 1031 exchange is a tax-deferred investment strategy that lets you swap two like-kind properties. Since the transaction may qualify for tax deferral, you can delay capital gains tax payments and preserve your capital. However, taxes are not eliminated and may apply under certain circumstances. The types of assets you can exchange are regulated by the IRS, so you can’t exchange properties on a whim.
What Is a 1031 Exchange Custodian?
Among the many professionals you’ll need to work with during a like-kind swap, the qualified intermediary (sometimes informally referred to as a custodian, accommodator, or facilitator) is among the most essential professionals involved in a like-kind exchange. Who is the custodian? While sometimes referred to as a custodian, the formal IRS term is qualified intermediary. These entities help coordinate the transaction by holding sale proceeds, preparing required documentation, and facilitating timely reinvestment.
Do You Need a Realtor To Do a 1031 Exchange?
If you enter a 1031 exchange for its tax-deferral benefits, you’ll need to work with various professionals, companies, and other entities to ensure a successful transaction. Some are absolutely required, such as the qualified intermediary. Others are optional, such as a 1031 exchange realtor. Do you need a realtor to do a 1031 exchange, then? Realtors can assist with identifying like-kind properties, coordinating closings, and navigating market conditions, all of which can be beneficial within the exchange timeline.
What Is the Escrow Fee for a 1031 Exchange?
A 1031 exchange supports tax deferral—but it still incurs fees, including escrow charges. Escrow fees cover the cost of securing sale proceeds in a neutral account managed by your qualified intermediary to preserve the tax-deferred status. Typically ranging from 1–2% of the property value, these fees are classified as exchange-related closing costs—which reduce your reinvestment requirement, rather than being independently deductible. Realized 1031 shares a clear guide below explaining how escrow fees work and their impact on your exchange.
Depreciation Recapture in a 1031 Exchange: What To Consider
When undergoing a 1031 exchange, investors often focus on deferring capital gains taxes associated with the sale of investment property. However, another important consideration is depreciation recapture—a provision that may require a portion of prior depreciation deductions to be taxed upon a triggering event, such as the sale or disposition of the asset.
1031 Exchange Clauses and Disclosures To Consider in a Contract
When entering a 1031 exchange for potential tax deferral benefits, it is important to work with qualified professionals and use well-drafted agreements that align with IRS requirements. Certain clauses and disclosures are commonly recommended in real estate purchase and sale contracts to help clarify the intent of the parties, support the structure of the exchange, and mitigate the risk of misunderstandings. Below, Realized 1031 outlines several contract provisions often included in like-kind exchange agreements. These clauses may help align the transaction with IRS expectations and facilitate cooperation among all involved parties. 1031 Exchange Contract: Understanding the Basics
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