1031 Exchanges
1031 Exchange gets its name from Section 1031 of the Internal Revenue Code.
In short, a 1031 Exchange is a process by which an investor can defer capital gains taxes from the sale of a property by reinvesting those funds into a new investment property.
Here are the rules that must be followed to ensure a successful capital gains deferral:
Proceeds from the sale must be transferred directly to a qualified intermediary
The new investment property must be identified within 45 days of the sale and purchased within 180 days
To defer all capital gains, the new property must be of equal or greater value of the prior sale, and the mortgage must also be of equal or greater value.
Furthermore, you can identify and purchase more than one investment property with the proceeds from your sale. We highly recommend you get expert advice to navigate through this process.
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