1031 Tax Deferred Exchange - Many Options That Each Provide Many Advantages

One aspect to choosing 1031 Tax Deferred Exchange is that you will confront numerous options from which to make up your mind and yet be sure that whichever option you choose it will help make you a considerable amount of money such as saving on paying capital gains tax at the time of selling your current investment property in order to acquire a fresh one. In fact, it would be to your advantage to, first of all, seek out professional advice before proceeding further with regard to 1031 Tax Deferred Exchange.

List With Real Estate Brokers

Having decided that 1031 Tax Deferred Exchange is what you want, you must then list with a real estate broker all of your existing properties and also ensure that such list includes an agreement that clearly states that you are using your property to complete 1031 Tax Deferred Exchange.

To be sure, if you go in for 1031 Tax Deferred Exchange, you will then be in a good position to roll-over all of the monies you receive when you sell your investment property which monies in turn must be used to purchase one or even several similar (like-kind) investment properties. However, during closing the proceeds must be transferred to a Qualified Intermediary who will keep the proceeds from the sale till such time as these proceeds are to be used to buy new like-kind property.

As mentioned, 1031 Tax Deferred Exchange permits you to also defer your capital gains tax as long as the entire amount of money from the sale of a property is used in purchasing similar (like-kind) investment properties. Thus, this deferment is tantamount to getting an interest-free loan for the entire amount that you would have spent on the cash sale which means that you get to retain more equity which in turn makes it possible for you to obtain properties with still higher values while of course, using 1031 exchange.

However, 1031 Tax Deferred Exchange is only applicable as long as you sell real estate that is investment oriented and it won't hold true if you are selling personal residential property. Also, the properties in question must be similar or more precisely like-kind which means that if you are exchanging real property then the two properties in question must both be real properties. In fact, there is also nothing stopping you from exchanging a single property for many properties or even buying a single property from the proceeds of many properties.