Real Estate Secrets: Understanding 1031 Exchange Rules Work And How You Can Save Money When Selling A Property
Not many people are aware that they can profit a lot more in selling their real estate property. This is a method called 1031 exchange rules but before you can avail these terms there are requirements that you have to follow.
First and foremost, what is 1031 exchange rules?
In section 1031 of the IRS tax code which allows investors to defer paying any capital gains taxes on the proceeds of the sale of real estate which is summed up as the 1031 exchange rules. This is if the profits are put towards the purchase of a “like-kind” property.
To know more about the ways of 1031 exchange rules, keep reading.
Get to know the 1031 exchange types to find the ones that suit you better.
Deferred exchange is when a property is sold first then a new one is bought after an ample amount of time, click here to learn more about this exchange.
In reverse exchange it covers the process of buying the replacement property first then selling the current property after, view here for more details.
In terms of simultaneous exchange, a property is exchanged after another, discover more about how this exchange works.
You must take into considerations the rules governing how the 1031 exchange happens. Among these are acting as your own exchange facilitator or using the same exchange in the prior years.
What are the qualifications within the 1031 exchange rules?
In the terms of the 1031 exchange rules there is a limit to the properties that is three.
With this method you can actually assure yourself that at least one gets through the process successfully. There is only a limit of three and you must be able to close at least one of those.
For you to qualify on the terms the property that must be sold should be an investment one.
You must remember that you still have to pay for the tax that is on the original profit and the gains for the new property. You can learn all about the ins and outs of 1031 exchange rules here.
The 1031 exchange rules can be complicated, that is why it is recommended to ask for tax associate to help you in the process. They would be a great asset to help you navigate through the complexities of 1031 exchange rules.
You can also share this information with your loved ones or those whom you know is planning on selling their property.
Make sure that you know how to sell your property for starters, learn more details about it here.