Our recent newsletter discussed the basics of Who?, What?, and How?, in regards to a 1031 Exchange. Didn’t get that in your in-box? Click HERE to subscribe and receive our quarterly tax saving tips along with industry news.
When (part 1)? In terms of timing, an Exchanger must have 1031 Exchange documents in place prior to any changes of ownership. Once an Exchanger sells, they typically have 180 days to buy. Or, they can complete a Reverse Exchange and buy first. U.S. taxpayers can complete as many 1031s as they like: no limit on dollar values or transaction quantities.
When (part 2)? In terms of situation, 1031s are valuable any time an Exchanger wishes to replace or upgrade one or more assets/properties, the sale of which will result in at least $5,000 of taxable gain.
Where? Assets must be used primarily in the U.S., or sitting on U.S. soil in the case of real estate. All 1031 paperwork can be completed electronically and by remote.
Why? This is a classic “save the best for last”: 1031s improve cash flow and ultimately profitability! Keep the cash you would have otherwise paid in tax: your tax rate (normal income and/or capital gains) times the taxable value of the assets you’re getting rid of. Benefits begin as soon as your next tax payment is due.
Possible Changes for 1031 Exchange?
Although it’s unlikely that Section 1031 will be entirely repealed in the near future, … the Federal Government is in the process of proposing limits on real estate exchanges, exclusions on collectibles and exclusions for personal property. Call your CPA today and start now on a 1031 Exchange before any changes take place.
We will keep you updated on these proposed changes via our December newsletter and here on our news page.