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Can Foreign Investors Do 1031 Exchanges?
Can foreign investors take advantage of IRS §1031 to execute a tax-deferred exchange when selling their U.S. real estate assets? The short answer is yes. The longer answer is a bit more complex. Congress enacted the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) to impose a tax on foreign investors selling real property assets in the United States. The act requires that anyone who buys real estate assets from foreign persons or entities must withhold a prescribed part of the purchase price, which would normally go to the foreign seller. Why exactly? To ensure that the foreign seller pays capital gains taxes when they are due.
The Extension Of 1031 Exchange Deadlines: Are You Ready?
When the IRS announced various deadline extensions in April 2020, a large bulk of the U.S. population breathed a collective sigh of relief. The extension of quarterly tax payments and filing deadlines from April 15 to mid-July provided wiggle room for taxpayers dealing with COVID-19’s economic fallout.
How You Complete a 1031 Exchange in 10 Easy Steps
A 1031 “like-kind” exchange is widely used by real estate investors to create and preserve wealth. In simple terms, Internal Revenue Code §1031 allows real estate investors to defer capital gains taxes on the profits from selling an investment property, provided the sale proceeds are “exchanged” (reinvested) into another “like-kind” property (investment real estate).
The End of Non-Real Estate 1031 Exchanges?
Our previous blogs on 1031 Exchanges focus mostly on real property, or real estate. However, the Internal Revenue Code (IRC) 1031 also covers what is dubbed “personal property.” In other words, property held for investment and/or business purposes, but that isn’t real estate, is also eligible for 1031 exchanges - at least for the current time.
What Happens When It's Time For Me To Sell My Investment Property?
There are two general paths that you can take when it comes time to sell your investment property. One is to defer capital gains taxes and invest all of your gains into another property. The other is to cash out and do whatever you like with the money from your investment property sale. But for that flexibility, you’ll have to pay taxes on capital gains. In this article, we’ll look at both options so you can decide which may be right for you.
The IRS Extended The 1031 Deadline, But Should You Wait?
Late in the week of April 6th, the Internal Revenue Service (IRS) extended the deadline for 1031 like-kind exchanges for those falling between April 1 and July 15, 2020. This was in response to the COVID-19 virus and the difficulty that the “shelter in place” order caused for 1031 investors who were in the process of buying and securing financing for a replacement property. While this extension is great news, and takes unnecessary pressure off of those in a 1031 exchange, it might not be the best solution for everyone. Let’s consider the options below.
What Happens If My 1031 Exchange Falls Through?
A 1031 exchange has a stringent timeline and set of rules to follow. This leaves little room for error. Even the best-prepared investor can get caught off guard. When that happens, what will you do for a backup?
IRS Extends 1031 Exchange Deadline To July 15, 2020
On Wednesday, March 25, 2020, we issued a letter to the United States Secretary of the Treasury Steven Mnuchin, urging the Treasury Department and Internal Revenue Service to delay the deadline for like-kind (IRC §1031) exchanges. Within the letter, we implored Secretary Mnuchin to extend the deadlines to identify replacement properties and complete like-kind exchanges for 120 days or to the last day of the general disaster extension period in light of the unfolding COVID-19 crisis and the resulting delays and hardships that taxpayers and real estate investors will be forced to burden as a consequence.
LinkedIn: 1031 Exchanges and COVID-19
Our Chief Executive Officer, David Wieland, just published a piece on LinkedIn, entitled "1031 Exchanges and COVID-19." The piece is an extended explanation of our recent letter to the United States Secretary of the Treasury Steven Mnuchin urging the Treasury Department and Internal Revenue Service to delay the deadline for like-kind (IRC §1031) exchanges.
Realized Urges Secretary of the Treasury to Delay Deadline for Like-Kind (IRC §1031) Exchanges
On Wednesday, we issued a letter to United States Secretary of the Treasury Steven Mnuchin urging the Treasury Department and Internal Revenue Service to delay the deadline for like-kind (IRC §1031) exchanges.
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