Best Financial Advisors in Homestead, FL

Section 1031 of the Internal Revenue code allows you to defer the payment of taxes on gain realized on the sale of investment property if you reinvest in another investment property. Also known as a tax deferred exchange, delayed exchange, and other terms, is described under Internal Revenue Code Section 1031. It allows you, the investor the opportunity to defer capital gains taxes owed upon the sale of investment or income producing property by exchanging the property for other like-kind property. The IRS has specific guidelines that must be adhered to for the transactions to qualify and a Qualified Intermediary must be a part of the closing to achieve a safe harbor exchange.

When considering the sale of real estate that has been held as investment (i.e., long term appreciation) or production of income (i.e., rental, farming, etc.). You are selling property that was inherited and it has since appreciated over time. You would like to sell to geographically relocate investment property. You plan to consolidate multiple investment properties into a single larger property or Diversify your real estate portfolio by selling a single large property to purchase multiple investment properties. A business has outgrown a location or is downsizing. Estate planning

The IRS requires you to identify in writing your potential replacement properties within 45-days of the sale closing date. You must also complete the exchange, receive ownership of your new property within 180-days of the sale closing date. A professional qualified intermediary will provide guidance on the identification rules and the forms needed for identification of the replacement property.

To receive the benefits of tax deferral you will be reporting your 1031 exchange to the IRS for the year of the sale (IRS form 8824). It is the taxpayer/owner of the property who reports the property that must receive ownership of the new property. For tax reporting purposes the IRS knows us by our taxpayer ID number (Social Security Number, TIN). If a property is held in the name of an individual it is the same individual that must take title to the replacement property; if owned by a corporation then, the same corporation must take title. For questions on ownership issues, please contact us.