1031 Exchange Rule 

Are you a real estate investor or property owner interested in utilizing the 1031 exchange rule in your transactions? The 1031 exchange rule is a section of the Internal Revenue Code written by Congress, allowing anyone who meets all requirements to sell their property and defer paying capital gain taxes.  A properly formed exchanged allows an investor to sell a property, to defer all capital gain taxes and to reinvest the proceeds in a new property. In order to benefit from the 1031 Exchange Rule, it is crucial to have a title company like, Chairman Title, with the experience and knowledge for the exchange process.

Ø  A 1031 exchange permits investors to sell and buy comparable property types while deferring the capital gain taxes.

Ø  Authorized by section 1031 of the IRS code and offers protection of the real  estate assets.

Ø  A  1031 exchange permits the investor to reinvest 100% of the equity from the sale of a property, followed by the purchase of a preferred replacement property without recognizing any gain.

Ø  This type of property sale and reinvestment can either be done through a simultaneous or delayed 1031 exchange.

Ø  In most cases a 1031 exchange is done as three-party delayed exchange also known as a “Starker Exchange” in which an intermediary ensures a reciprocal transfer of properties and provide a “safe harbor” against the actual receipt of exchange funds.

Ø  It is extremely important that this process be done correctly, otherwise, a taxable event may occur. 

 1031 exchanges provide real estate owners an opportunity to build upon their net worth, while increasing a real estate portfolio.