22 Lessons Learned: Sales

Real Estate Secrets: Understanding 1031 Exchange Rules Work And How You Can Save Money When Selling A Property

Did you know that you can still make more money from the property you are selling besides what the buyer is going to pay? This is through the help of the 1031 exchange rules yet you cannot just avail the terms you have to comply a set of requirements.

Before going further, what is 1031 exchange rules?

Based on the 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. The profits must be placed towards the buying of a “like-kind” property.

For a deeper understanding about 1031 exchange rules continue reading.

Get to know the 1031 exchange types to find the ones that suit you better.

In terms of the deferred exchange, a particular property is sold first then a new one is bought to replace it in a certain amount of time, click here to understand 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.

It must be taken into account that there are rules in 1031 exchange. Among these are acting as your own exchange facilitator or using the same exchange in the prior years.

What are the areas that 1031 exchange rules cover?

There is a maximum limit when it comes to the number of properties and that is three.

Through this you will be able to make sure that at least one of it successfully goes through. You can only stick to three potential properties that can be identified buy you must ensure that you close one of them.

It is not applicable to those who are selling their primary residences, it has to be an investment property.

You must be aware that you have to pay the tax of the original profit as well as the additional gain for the new one. 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 provide you with the necessary details about 1031 exchange rules and what you need to know.

Feel free to share this information with your friends or family who is looking to sell their real estate property.

Make sure that you know how to sell your property for starters, learn more details about it here.

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