ShareThisWhat Is A 1031 Exchange?
Created by the I.R.S. in 1990, section 1031 of the Internal Revenue Code allows taxpayers, with the aid of a Qualified Intermediary, to sell investment or income property solely for the purchase of other “like-kind” property within 180 days and to defer the capital gains taxes normally associated with such a sale. In essence, the taxpayer is exchanging one income property for another and deferring the gain in the process.
Known as a 1031 or a tax-deferred exchange, this strategy can be utilized again and again, allowing taxpayers to continue to defer gains throughout their lifetime and to accumulate more and more quality real estate.
With a 1031 Exchange, taxpayers can also consolidate, diversify, or convert the nature of investment properties in preparation for relocation, retirement, or even setting up heirs to inherit gain-free properties in the future. With a little planning, the 1031 Exchange can be a perfect tool for acquiring an ideal retirement home or setting up an inheritance for one’s children.
One Response to “What Is A 1031 Exchange?”
May 28th, 2008 at 8:15 PM
Naji,
1031 exchange is one of the best ways to build wealth as you avoid paying taxes and build wealth over time. DeferEm.com ( http://www.DeferEm.com ) is a FREE to use online web tool that explains visually elements of an exchange boot, recognized and deferred gain. It creates an IRS Form 8824 (Like Kind Exchange) and an asset exchange report.
This tool can be found on HR Block and IPX1031 websites too.
This simple web application which is very easy to use is available at TReXGlobal.com ( http://www.trexglobal.com ). Please check it out
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