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Section 1031 Tax Deferred Exchange
What is a 1031 Tax Deferred Exchange?
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A 1031 Exchange allows you to defer the capital gains when you sell your
investment property.
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It is based on
Section 1031 of the IRS code.
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IRS Explanation
What are the requirements for a 1031 Exchange.
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You must open a Exchange Account before escrow is closed on the property
you are selling
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You can not have actual receipt of any funds from the sale
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You must identify the new property within 45 days, and close escrow on
it within 180 days from the day that escrow closed.
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You must Reinvest all Proceeds from the sale.
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You must have the same or greater debt on the new property.
What is an Exchange Account?
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An Exchange Account is opened with a Qualified Intermediary, and is where
the money from the sale is put between the sale and purchase.
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What is a Qualified Intermediary?
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A Qualified Intermediary is the company that handles the paperwork and
money during a 1031 Exchange.
How do I calculate my Capital gains and taxes?
There is a good
calculator
on Asset Preservation's website.
Do all Realtors know about 1031 Exchanges?
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No, Most have heard about them, but there are few that really understand
them.
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I am well versed in the aspects of Exchanges, and know about more
advanced exchange techniques.
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I attend a weekly meeting of Investors and Realtors with the purpose of
discussing Exchanges.
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I am a Member of the National Council of
Exchangers, and go to their training and marketing sessions.
Speak with your accountant about the advantages of doing an
exchange for you.
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