When you sell real estate, you have to pay tax on the gain (or profit) from the sale
of your property. This gain is caused either by the property appreciating over
time or by taking depreciation deductions for tax purposes.
A Section
1031 Exchange, named for the Internal Revenue Code Section, offers you an
alternative to paying the tax on this sale. With a 1031 Exchange, when you sell
business or investment real estate and replace it with other business or
investment real estate, you can defer the payment of the tax that is normally
due on the sale.
If your objective is to use the proceeds from the sale
of your property to buy more business or investment real estate, a 1031 Exchange
can provide you with more funds for investment than can be achieved through the
investment of after-tax proceeds from the sale of your current
property.
A 1031 Exchange is not a tax loophole. It is a code section
written by Congress specifically to allow anyone who meets its requirements to
sell their property and defer paying tax on the gain.
Please email or
call me to ask about the Reverse Exchange and how to start a 1031 Exchange.
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