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1031 Exchange for Investment Properties

This strategic business plan will allow you to defer capital gains to better maximize your return.

What is a 1031 exchange?

Like Kind Exchanges—also known as tax deferred exchanges—offer taxpayers an opportunity to build wealth and save taxes. Experienced real estate investors recognize the 1031 exchange as an effective and simple means of deferring the capital gains tax liability incurred upon the future sale of property.

How it works

1031 Exchange, as defined by Section 1031 of the Internal Revenue Code, allows investors to sell investment or business-use property and purchase a replacement property while deferring 100% of the gains that would ordinarily be due at the time of sale. These deferred taxes—including Federal capital gains tax, state ordinary income tax, and net investment income tax—as well as the gains from the new property, are not taxed if the 1031 Exchange guidelines are followed.

1031 Exchange Guidelines

There are many reasons to utilize a like-kind exchange, like diversifying or consolidating your real estate portfolio, increasing your purchase power, or investing in the growth of your business. In order to benefit from a 1031 Exchange, your property must have been used for business or investment purposes, and exchanged for a like-kind replacement to be held for similar purposes. Other 1031 Like-Kind Exchange rules and criteria that must be met include:

  • Identifying replacement property within 45 days of close of sale
  • Purchase of replacement property within 180 days of close of sale
  • Properties that are bought and sold must be considered “like-kind” to each other
  • Process must be handled by a Qualified Intermediary (QI)

Leveraging your 1031 Exchange

Utilizing this unique investment tool to give investors the ability to diversify, leverage, and defer taxes requires the help of a Qualified Intermediary. Dream Town refers only the most well-established and secure Qualified Intermediaries in the industry to facilitate your 1031 Exchange. Your Dream Town broker will help you locate an appropriate replacement property to reinvest in, no matter your needs. Contact our team today at 773.657.5578 to learn more about a 1031 Exchange.

Get More Information About 1031 Exchanges.

Learn to defer capital gains to better maximize your return.

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