1031 Exchanges – A Need To Know Guide
A key topic that should be very important to real estate investing professionals is that of 1031 tax exchanges. If you are really serious about investing in real estate it will benefit you to study and learn the 1031 exchange rules in depth. This way you will be investing with the know how to get the best tax deferrals.
The 1031 tax exchange rules need to be followed closely. Deadlines are very important. You are required to buy new real estate by 180 days prior to registration of the sale and prior to the next filing deadline. Another catch is that there is a 45 day identification time period for you to decide which of three methods you want to use to mark properties you are interested in for exchange.
Your goal is to limit the total amount of deferred taxes. This can be accomplished by moving the entire amount into a new property investment. According to the tax code, “1031 tax exchange rules”, it is not possible to take money generated from a sale, and use it for alternate, unrelated expenses. Therefore, you need to be particularly specific with your documentation. Keep a specific set of books dealing with the exchange, and write separate well documented checks for each part of the transaction.
If you live in a different state to where the property is sold, many states mandate that the closing agent or real estate agent must withhold a percentage of the sale price to make sure that the state receives any tax revenue due, because tracking down these non residents later can be very difficult.
The real property tax act of 1980 requires that foreigners withhold ten percent of the sales price for this reason. Some states will waive this requirement that it why it is very important to know your state’s stand on this issue.
You must use a qualified intermediary who completes all the necessary paperwork and filing and must adhere to the 1031 tax exchange rules. There are many places on the internet where you can find 1031 exchange information and you can even find qualified intermediaries in your state.
Visit http://www.investing-secrets.com/1031-exchange/recommends/article-1031 is you’d like to get your very own version of this article for your website.
If you’re a real estate investor, you simply have to study your 1031 exchange rules. It could save you literally thousands of dollars in taxes, and could help you avoid many of the pitfalls associated with 1031 exchanges. By doing a little research you can maximize your tax deferrals. You must purchase your replacement property only 180 days after the transaction, and all of the money from the sale of your old property must be reinvested in the new property. Go online to find the most current 1031 tax exchange information and find a qualified intermediary to help you with the paperwork.
- David E. Williams
Tags: investing in real estate, time period, David E. Williams, 1031 tax exchanges, new real estateOriginally posted 2008-04-18 15:04:13.
Related posts:
There is no doubt that too much debt, funding too much consumption, has created the fall into deflation that the US is in. Most of the world has followed the US into a too much debt situation, including (or leading?) Japan, which is in recession despite some $500 bil reserves.
FM: Your statement to #1 is so true: “Businesses cannot all improve their financial condition by cutting costs. ”
But this inevitably leads to the conclusion that, to fight the deflation we're facing due to over-consumption in the recent past, the gov't must support MORE consumption, now.
Bernake will soon [...]
The comments McGlowan made were so bad because it reveals that she has a core belief which is extremely radical and intrusive on individuals' liberty. While she acknowledged on Gallo that she had not read the bill and she was not familar with the bill. When Gallo provided a basic overview of the bill, that it would require every individual to declare on the IRS tax forms what and how many guns they have in their house, she had no problem with that idea.
In otherwords she has no fundamental problem with the government wanting to know exactly what and [...]
The Bush tax cut should be voted up or down prior to the November mid-terms. Politicians are rarely timid when it comes to spending hundreds of billions of Americans’ hard-earned money. Who has the courage and fortitude to exhibit their convictions during an election year? Unfortunately, many have demonstrated cowardice and wanton disregard for the wishes of the American people. It is obvious that they fear the up or down vote because that vote would be a career changer for some. Most citizens realize that it was politicians from both sides of the aisle who were responsible for decimating the [...]
On what accounts did Nick Clegg lie? He entered a compromise deal based on negotiation. The public are tired of Labour, the only people who aren’t tired of Labour are the busybodies paid by Labour.Alternatively he could have sacrificed some ideals to join an alliance with Labour. Labour are too authoritative to allow “liberal” ideals. If everything and everyone must be “controlled”, how can anything be Liberal?We’re facing the usual situation where Labour can only think “I want this, I’m going to make others pay for it”. Should a plumber pay taxes for students to study Philosophy? The student already [...]
[...] unknown wrote an interesting post today onPlaying the Real Estate Game – The Offer Phase « Real Estate …Here’s a quick excerptMichael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. … [...]
Dr. Paul is the only candidate I will support. Trump nneds to stick to real estate.?