1031 EXCHANGES

Updated: Sep 1, 2020

All about 1031 Exchanges, also known as, "like kind exchanges".


IRS EXCHANGE RULES


The IRS gave property investors a way to defer paying capital gains tax on a sale of an investment property. This can save you lots of $ because you can trade UP and scale UP your investment properties. As long as you don't touch ANY of the profits (gains) and reinvest into a NEW investment property (or properties) within the conditions set forth by the IRS (more on this below)...you don't pay Uncle Sam a dime. This, my friends, is how you grow your real estate portfolio over time.

1031 Exchange Rules Overview

1. Property Requirements

  • Must be held for investment or used in taxpayer's business.​

  • Cannot be stocks, bonds, or partnership interests.​​


2. Timing​

  • 45 days to identify replacement property after the close of the relinquished property.​

  • 180 days to acquire replacement property (includes the 45 days above).​


3. Identification Requirements​

  • Three-Property Rule​ - 3 properties without regard to the fair market value of the properties.

  • 200% Rule - any number of properties as long as their aggregate fair market value at the end of the identification period does NOT exceed 200% of the aggregate fair market value of all of the relinquished properties as the date the relinquished properties were transferred.

Want to learn more? Need specific consultation? Our 1031 Exchange Expert, SuZanne Kennedy, offers free 15 consultations. Book your appointment here!


Here's a FREE link to additional information:

Improvement Exchanges - SuZanne
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Download PDF • 396KB

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