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Disasters and 1031 Exchanges (Part 2)
If you’ve been following our blog, you’re probably familiar with the 1031 exchange process. Just to refresh, a 1031 exchange is when an investor sells a property and reinvests the proceeds into a second property to avoid paying taxes on the profits (also referred to as ‘deferring’ taxes). Specifically, the investor will avoid paying capital gains and depreciation recapture taxes.
Dealing With The Emotional Attachment To Your Property
This is part 1 of Ed Maddox's series, entitled: Things I Wish I Knew (While Completing My 1031 Exchange). In many cases and for various reasons, the idea of utilizing a 1031 exchange often comes into existence when considering the sale of a property that has been held for a long time. Often times, the success of the property is due to sacrifice, sweat equity, and constant diligence of management on the part of the owners.
Making Sense of Those Property Exchanges – Explanations
On paper, relying on the Internal Revenue Code (IRC) section 1031 to defer capital gain taxes on a real estate sale seems straightforward. You target the replacement property within 45 days, then close on that property within 180 days. Your Qualified Intermediary handles the exchange, resulting in a new property and a sweet tax deferral.
Benefits and Risks of Fractional 1031 Investments
*Update February 2019: Realized has established its Secondary Market and has completed its first Secondary Market transaction. Fractional 1031 investments are subject to the same benefits and risks as other real estate investments. However, the structure of fractional 1031 investments have their own unique characteristics.
Six Strategies For A Smooth 1031 Exchange
In a previous blog, we noted that 1031 Exchange rules can be challenging. That article focused on three Internal Revenue Service (IRS) rules when it came to identifying the replacement property or properties for a successful exchange.
‘Tis the Season - For Installment Sales
The upcoming holiday season can be a time of joy, with family, friends and celebration. The holiday season can also be a time of stress, with tangled lights to untangle and hang, gifts to shop for and wrap, and parties to plan.
In a 1031 Exchange? You May Need to File a Tax Extension
Are you currently in a 1031 exchange or contemplating beginning an exchange before the end of the year? If you sold or are planning to sell investment property between October 17, 2017 and December 31, 2017, you should plan on filing IRS Form 4868 - Application for Automatic Extension of Time to File U.S. Individual Income Tax Return on or before April 15, 2018.
Tax Reform / 1031 Exchange Update - November 7, 2017
Last week, House Republicans released H.R. 1, their long-awaited 429-page tax reform proposal. The bill, which is titled the ‘Tax Cuts and Jobs Act (“TCJA”) leaves 1031 “like-kind” exchanges intact!
Your Vacation Home and the 1031 Exchange
Consider the following. You own a lakeside vacation home. Over the years, that home has been a great place for family gatherings, and to hang out on weekends. Now, the family is grown and you are ready to dispose of the property, hopefully without paying a boatload of capital gain taxes.
Constructive Receipt Of Funds: A 1031 No-No
We’ve written extensively on how you can take advantage of the Internal Revenue Code’s Section 1031 to defer tax liability on relinquishing property. We’ve also noted that the time period in which you can find a like-kind asset, and then buy it, is strict. If you miss the 45-day deadline (in which to identify a replacement asset) and the 180-day window (during which you must close on that replacement asset), the exchange might no longer be valid, and you end up owing taxes.
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