We Offer 1031 Exchange Services Designed To Help Taxpayers
Maximum Tax Deferral in a Wide Range of Circumstances
Section 1031 of the Internal Revenue Code allows taxpayers to defer capital gains tax on like-kind exchanges of qualifying investment property. But, to secure tax deferral, taxpayers do not truly have to exchange only one piece of property for another. Taxpayers’ sale and purchase transactions can take place separately, and taxpayers can even secure the tax deferral when acquiring a replacement property before selling the property to be “exchanged.” Doing so, however, requires 1031 exchange services from a qualified intermediary.
We Provide Assistance with All Types of 1031 Exchanges
We offer comprehensive 1031 exchange services focused on helping taxpayers secure capital gains tax deferral. We offer these services for all types of 1031 exchange transactions, including:
1. Straightforward 1031 Exchanges
A straightforward 1031 exchange involves selling one piece of property before buying another asset of like kind. Reinvesting in like-kind property through a 1031 exchange avoids recognition of any gain resulting from the sale of the exchanged property, thus, deferring any capital gains tax liability.
Most 1031 exchanges fall into the straightforward category. However, while these exchanges may be relatively simple in theory, issues can still arise. As a result, it is important to obtain 1031 exchange services from a qualified intermediary that can guide you through the process. These services even include holding the exchange funds from the sale of your relinquished property until you can use the funds to close on the sale of your replacement property. Without use of a qualified intermediary in this way, receiving funds from the sale of your relinquished property may trigger immediate tax liability, even if you plan to use the proceeds for the purchase of a replacement investment property.
2. Reverse 1031 Exchanges
A reverse 1031 exchange involves purchasing a replacement property before selling the property to be exchanged. These exchanges qualify for tax deferral under a safe harbor provision that requires use of an “Exchange Accommodation Titleholder” to facilitate the series of transactions involved. To qualify under the safe harbor, the sale of the exchanged property must take place no more than 180 days after the acquisition of the replacement property.
However, even if the acquisition of a replacement property takes more than 180 days, taxpayers can still secure a tax deferral if they engage in the proper steps. We provide services for both types of reverse 1031 exchanges and serve as the Exchange Accommodation Titleholder for clients utilizing the reverse exchange safe harbor.
3. Simultaneous Exchanges
A simultaneous exchange is similar to a straightforward exchange, except it involves closing on the sale of a relinquished property and the purchase of a replacement property at the same time. When seeking to conduct a simultaneous exchange, it is critical to ensure that everything is in place to close both transactions on time. This is where working with a qualified intermediary comes into play.
When we provide our 1031 exchange services for simultaneous exchanges, we work closely with our clients in the lead up to their closing date to help ensure that everything goes smoothly. Whether this is your first 1031 exchange or you have experience leveraging the tax benefits available under Section 1031, we can add value and give you confidence that all aspects of both transactions are being handled appropriately.
4. Improvement and Construction Exchanges
If you are interested in purchasing an investment property to improve, we can assist you with ensuring that the excess proceeds from the sale of your relinquished property remain eligible for indefinite tax deferral with an improvement exchange. The alternative is for these excess exchange funds to be classified as “boot,” which renders them immediately taxable under the Internal Revenue Code.
Another related type of 1031 exchange is the construction exchange. With a construction exchange, rather than improving an existing structure, you use the excess exchange funds from the sale of your relinquished property to build a new structure from the ground up. This also avoids “boot” treatment, provided that you engage a qualified intermediary to facilitate each transaction in the process.
Inquire About Our 1031 Exchange Services
If you would like more information about our services, we invite you to get in touch with our office. To speak with an attorney about our 1031 exchange services in confidence, give us a call or tell us how we can contact you online today.