Lots of investors have asked what exactly is a 1031 tax exchange? what are Pros and Cons of a 1031 Tax-Deferred Exchange? what are the timelines and guidelines? How to Do 1031 Exchanges to Defer Taxes or can you legally defer your capital gains taxes?
Professional Financial Solutions expert California Trust Deed Investments will help you for all your 1031 tax exchanges needs to deferring or Reducing Capital Gains Tax, also we ensure you have access to the best possible advice when reviewing your financial future.
What Is 1031 Tax Exchange?
A l031 Exchange is a transaction in which a taxpayer is allowed to exchange one investment property for another by deferring the tax consequence of a sale. 1031 tax exchange also known as a like-kind exchange under United States tax Law. A like-kind exchange can involve the exchange of one real estate investment property for another real estate investment property, one business for another business. Like-kind exchanges have been characterized as tax breaks or “tax loopholes.
How to Do 1031 Exchanges to Defer Taxes?
When you sell an investment property, even if you weren’t the one who initially purchased, you end up on the hook to pay capital gains tax. The 1031 Exchange has been cited as the most powerful wealth-building tool still available to taxpayers. It has been a major part of the success strategy of countless financial wizards and real estate gurus.
Requirements for a 1031 Exchange
1. Timelines for a 1031 Exchange
2. Like-Kind Property in a 1031 Exchange
3. Exchange Property Held for Investment
4. Equal or Greater Debt and Equity in a 1031 Exchange
5. Constructive Receipt and Qualified Intermediary for a 1031 Exchange
Pros and Cons of a 1031 Tax Exchange:
In determining if a 1031 tax exchange is right for you, consider the following pros and cons:
Pros:
1. Deferring Tax
2. Potentially Higher Annual Cash Flow
3. Asset Accumulation
4. Property Management Relief
Cons:
1. Strict Regulations
2. Reduced Basis for Depreciation
3. Not Tax Free
for more details to know about the 1031 Tax exchange, you can Call us today at 818-865-1570 for a no obligation and no hassle free consultation and review to see what CATD Investments can do for you.
