Have you considered a Tax Deferred "1031 Exchange"? It is a simple method or strategy that involves selling a qualifying property and buying another qualifying property within a specific time frame. The process is the same as buying and selling property in a normal situation but what makes this different is the whole transaction is considered an exchange and not a sale. This difference of "exchanging" allows the taxpayer to qualify for a deferred gain treatment. Real Estate sales are IRS taxable and an exchange is not. US Code: Title 26, 1031.Exchange of Property Held for Productive Use or Investment.
Make sure you understand the IRS intention for exchanging a property and the deferral of capital gain taxes. You should check out Section 1031 of the Internal Revenue Code for the tax code and also Like-Kind Exchange Regulations, issued by the US Department of the Treasury, for the specific interpretation of the IRS and the generally accepted standards of practice, rules and compliance for completing a successful qualifying transaction. It is very important to note that the Regulations are not just simply the law, but a reflection of the interpretation of the (Section 1031) by the IRS.
If you think a 1031 Exchange is for you the two major rules are , 1. The total purchase price of the replacement property "like kind" must be equal to or greater than the total net sales price of the real estate property that was sold and 2. the equity from the sale of that property must be used for the replacement property that is "like kind".
If you have any questions about a 1031 exchange or would like assistance, just let me know.
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