What Are The 1031 Exchange Rules?

1031 Exchange

Real estate investment is the most desirable choice for every investor. In the right conditions, real estate can provide hefty gains. Real estate is an excellent source of cash flow and appreciation. However, when you decide to sell the real estate you invested in, you might end up paying a significant amount in taxes.

This is where 1031 exchange comes to your rescue!

What is the 1031 Exchange Process?

1031 exchange rules

1031 Exchange Rules:

1. Sell a real estate investment property.

2. Put the proceeds securely with an independent third party known as a Qualified Intermediary.

3. Identify new property (or properties) to purchase within 45 days.

4. The last step is to close on the new property within 180 days using capital from the sale of the old property.

By following these 1031 guidelines, you can trade or acquire real estate without handling any cash. Technically, you're trading properties with someone because the money bypasses you and goes straight from closing to the qualified intermediary. And in case you're wondering… no, this is not tax evasion. Participating in a 1031 exchange is entirely legal and accepted by the IRS, as long as you follow the 1031 exchange rules.

1031 Exchange is an excellent tax deferral strategy. Using this, you can defer paying capital gains taxes indefinitely. However, the exchange is governed by defined time periods.

Once you have sold your relinquished property, you get only 45 days to identify a replacement property for the exchange to be successful. It can be extremely challenging to locate a suitable like-kind property within such a small time-frame. We at (name of the company - sponsor, property) specialize in property identification. You can choose from our extensive pool of off-market premium properties, which guarantee a high revenue stream.


1031 exchange

For further queries, do check our FAQ section to get answers to all your 1031 exchange related questions.

To know more about 1031 Exchange Rules you can speak to one of our advisors on 1-800-395-0046 or drop an email: info@1031property.com

I love to write on 1031 exchange, investments, and finance-related topics.
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