1031 Exchange Services

One of the biggest benefits of investing in real estate is the tax benefits.  One of the most common used tax benefits is the 1031 tax-deferred exchange. Simply, this mechanisms allow investors to defer taxes and build wealth over time. There are many rules to follow and time constraints to be adhered to, making it essential to work with an experienced brokerage firm like Calkain.

Exchanges happen quickly and Calkain works with clients to identify opportunities early to ease the anxiety that can occur once the exchange clock starts ticking.  We can help you set the right strategies, find the right investments and ensure a swift, easy transaction with the new property.

The 45 Day Deadline

Replacement properties must be identified within 45 days from the date of sale of your initial property. The identification must be in writing, signed by you, and delivered to a person involved in the exchange. Replacement properties must be clearly described, including legal description, and street address or distinguishable name.

The 180 Day Deadline

A replacement property must be received and the exchange completed no later than 180 days after the sale of the initial property or the due date (with extensions) of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier.

5 MUSTS FOR A SUCCESSFUL 1031 EXCHANGE:

For a successful 1031 Exchange, you have to play by the rules.  Here are our suggestions for the 5 must-dos for a smooth and successful exchange.

Determine what is deferred capital gains and what is depreciation recapture.

Find a qualified Intermediary – reputable, credible and experienced.

The property has to be held for investment or business purposes – on both ends of the transaction.

Know your timeline.

Start your search for exchange properties as quickly as possible.

Start Your Search

Top tips for your 1031 Exchange

Tip #1

Receipt of Cash and Relief from Debt May Result in a Taxable Gain

Tax laws indicate that the entire like-kind transaction may be disqualified should an investor take control of the cash or other proceeds from the sale of their property before the completion of the 1031 Exchange. Any cash or not like-kind property received at the end of the 1031 Exchange will be taxable to the extent of proceeds that are not like-kind.

Tip #2

Keep Track of a Property’s Tax Basis

It is vital to track the basis of your properties correctly to comply with Section 1031 tax regulations, as tax payments are deferred not eliminated. The tax due at the time of a taxable sale will be equal to the (Sales Price-Tax Basis)*Capital Gains Rate.

Amy1031 Exchange Services