Do you want to avoid those capital gain taxes on your real estate investment? Well, then take your game to 1031 exchange. 1031 exchange is not only good for you but also good for the economy. These are the best things about the 1031 exchange. So, don’t let capital gain taxes pin you down. Avoid them. Swap them until you drop them. With 1031 exchange, you can defer these taxes and build a strong real estate investment portfolio. Here is all you need to know regarding the and how they can help you avoid those annoying capital gain taxes on properties.
According to the , your losses or gains will not be recognized under the exchange—particularly those held for productive purposes. The same applies to investment purposes. It means that you don’t need land for land, warehouse for warehouse, or office for an office-based exchange. Under the 1031 exchange, you will not pay tax or will pay a limited amount of tax. However, the exchange must happen within the stipulated time deadlines. It’s also important to note that you are not limited when it comes to the number of 1031 exchanges you can perform. It depends on you. Here, you will be making profits for each swap. However, you will avoid taxes until you sell the property for cash.
Swap Until You Drop
Basically, you can sell your investment land and purchase an office rental for your business. Here, you will defer capital gain taxes until you sell the property for cash. There are 2 things involved:
You must sell an investment property. Thus, selling a personal residence won’t qualify you for the 1031 exchange.
Under the 1031 exchange, you must meet strict deadlines as well as timeframes.
Things You Can’t Do
According to IRS, you cannot use the 1031 exchange under the following circumstances:
- You cannot use the 1031 exchange when it comes to stock in trade and resale-held property
- Stocks, bonds, and notes cannot qualify for 1031 exchange
- Also, securities and evidence of interest cannot be used under the 1031 exchange
- If you have interests in partnerships, don’t expect to qualify for the 10131 exchange
- Also, don’t expect certificates of trust to be used in the 1031 exchange.
The Benefits of Using 1031 Exchange
Here are the biggest benefits of the 1031 exchange:
The 1031 exchange allows you to roll one asset/property into another asset/property. This means that you have a chance to defer any capital gains arising from the resale of any of your assets. Thus, you can save a lot of money through the 1031 exchange.
Portfolio Growth and Diversification
With 1031 exchange, you can take a high-value property and purchase several properties featuring higher returns
Upgrading Undesirable Assets
You can use 1031 exchange to transfer out those overpriced and underpriced rental properties
You can repeat the 1031 exchange as much as you want. This means that you can defer taxes indefinitely
Build Legacy Wealth
The best thing about the 1031 exchange is that your heirs can inherit all those assets of yours tax-free.
Want to ? Are you looking to avoid capital gain taxes? Well, take your game to the 1031 exchange. The above article is all you need to know regarding 1031 exchange options and how it can help you. Good luck!