The 411 on 1031 Exchange

“In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin, 1789

While taxes cannot be avoided, there are tax codes that can be used to your benefit. One of those is code 1031. This code outlines ways to defer capital gains taxes on investment property that you have sold and buy another property, but only if you follow the code and rules.

Here are the three most important things to keep in mind when considering a 1031 exchange:

1.     The exchange MUST be set up PRIOR to closing. This is not a retroactive decision – you can’t sell an investment property in May and then decide in June to create a 1031 exchange.

2.     After the exchange is set up, you have 45 calendar days after your closing to identify the replacement property (or properties) and 180 calendar days to close on that property.

3.     As a general rule, to qualify for the 1031, you have to have owned the property for 1 year.

There are other requirements, such as using a qualified intermediary to set up the exchange and purchasing a like-kind property.

If you have an investment property (single family home, commercial space, land, etc) and are considering selling it, let us know! Living True Home Group will guide you through the sale and purchase of your investment properties, and we will connect you with the right experts to advise you through the 1031 exchange process.