1031 exchange: Know The Basics Of A 1031 Tax Deferred Exchange - 11/09/08 09:46 AM
If you have heard about 1031 Tax Deferred Exchanges but did not know how you might be able to implement one as a solution to your current real estate problem, then I hope I can stimulate a little thinking for you.
A properly structured 1031 exchange is the sale or transfer of property for other “like” property in a way that allows the transferee the ability to defer capital gains taxes. As a simple way of thinking about it, a property owner will trade Property A for Property B and all the existing tax basis for A will be transferred … (4 comments)
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1031 exchange: IRS Begins Study of Like-Kind Exchanges - 10/09/07 05:31 AM
I just came across this report by the Treasury Inspector General for Tax Administration recommending a study of the validity of 1031 Exchange filings. After writing a series of blog articles on Like-King Exchanges, I thought I'd send this out as a finale of sorts. Seems like they feel not all filings have been valid, so they are going to perform a study to make recommendations To view the report, including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2007reports/200730172fr.pdf.
About The Author
As Broker and Co-Owner of Century 21 First Realty, a Tallahassee Real Estate Brokerage business, Joe … (13 comments)
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1031 exchange: How To Do A 1031 Tax Deferred Exchange - 10/03/07 05:51 AM
How To Do A 1031 Tax Deferred Exchange
Yesterday's blog reviewed examples of performing a 1031 tax deferred exchange and how boot is either avoided or recognized as a gain. Today, we'll address the basic flow of the entire process, from selling the original property through the closing on the new property.
The most important step in getting started with a 1031 tax deferred exchange is hiring the right real estate company to ensure that the process is successful from beginning to end. Miss one key step and all of your work might not be allowed under the Internal Revenue Code Section … (9 comments)
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1031 exchange: 1031 Tax Deferred Exchange Examples - 10/02/07 06:19 AM
Yesterday, we learned the difference between realized gain, recognized gain, and boot. Today, we will examine some examples of 1031 exchanges and apply our new vocabulary to the situations that they present.
In our first example below, we see that the investor sold a property for $180,000 and bought one for $400,000. The mortgage on new property was greater than the one it replaced, and the same amount of equity remained in the investment. This is a picture-perfect 1031 exchange. No boot was received by the investor, so there is no corresponding recognized gain.
In the next example, the investor sold a … (10 comments)
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1031 exchange: 1031 Tax Deferred Exchange: Realized Gain vs. Recognized Gain - 10/01/07 06:06 AM
Realized Gain vs. Recongized Gain
Last week, I started a series of blogs on the Internal Revenue Code Section 1031 tax deferred exchange. The blog covered the concept of "like-kind" exchanges and defined the time constraints involved when conducting a 1031 exchange.
Today, we'll explore the difference between "recognized gain" and "realized gain." While they sound a lot alike, knowing the difference can give the real estate investor an interest-free loan from the IRS! Additionally, we will define the concept of "boot." So, what do these three terms mean?
Realized Gain - This is the amount of gain that the investor made during … (20 comments)
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1031 exchange: Help From The IRS? - 09/28/07 06:44 AM
Introduction to the 1031 Tax Deferred Exchange
Everyone who thinks about investing in real estate has been told about the great "tax benefits" that come with real estate as an investment. Often times, they are counseled about the annual write-offs of interest and expenses, as well as the great "phantom expense" of depreciation. These are certainly reason enough to create a real estate investment portfolio, but there is another powerful tax strategy that should be utilized as well, the 1031 Tax Deferred Exchange.
I will write a series of blogs explaining how to maneuver through the maze of rules when performing an exchange. … (21 comments)
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