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3920 Via Del Rey Suite 1 Bonita Springs, FL 34134
Phone: (239) 596-1330 Toll Free: 800-699-3079 Fax: (239) 596-1332 |
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1031 Tax Deferred Exchanges |
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The following is for informational purposes, we recommend that you always talk to a 1031 Exchange expert prior to entering into this type of transaction.
A 1031 tax deferred exchange is a way for real estate investors to grow their assets by deferring the federal income taxes due on the sale until a later date. It is a method by which a property owner replaces one property for another like kind of property without having to pay any federal income tax on any financial gains at the time of the transaction. This transaction is converted into an exchange by means of an Exchange Agreement and the services of a qualified intermediary, who helps to ensure that the exchange is structured properly. In any other type of real estate transaction, the seller is taxed on any gain at the time of the sale . However, in a 1031 exchange, the tax due from any gain is deferred if the sale proceeds are reinvested in a “like kind” property within the required time, as determined by the IRS. If the seller receives the sale proceeds, the federal income tax would be due. There are four parties involved in a typical tax deferred exchange: · the taxpayer · the seller · the buyer · the intermediary
The taxpayer (also called the exchanger) has property and would like to exchange it for another piece of property. The seller owns the property that the taxpayer wants to purchase in the exchange. The buyer is the person that wants to purchase the taxpayers property. The intermediary facilitates the sale and purchase of the properties for a fee. The intermediary can not be related to the taxpayer. For more information, please contact us.
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