I am a licensed Realtor here in San Diego who can advise you with your 1031 Tax Deferred Exchange needs. I have a great relationship with a local qualified intermediary that can deliver in this type of real estate transaction. Having a local resource who knows all communities within San Diego and is able to identify up and coming communities is important when completing an exchange. There are many factors to consider when preparing to sell an investment property such as tenants, lease agreements, property condition, renovations, listing price, active homes for sale, and time of year that you have to plan for in order to give yourself the best chance to be successful. As your agent, I can guide you through this process, provide honest straightforward feedback, and connect you with quality professionals required to get the job done.
To get started, submit your property address to the link below for an instant online evaluation of your property or fill out the form to set up a phone call for a more accurate custom evaluation complete with a 1031 Exchange Brochure, and a free consultation with my Qualified Intermediary.
What is Internal Revenue Code Section 1031?
Since 1921, Federal tax law under Internal Revenue Code (IRC) section 1031 has permitted a taxpayer to exchange business-use or investment assets for other like-kind business use or investment assets without recognizing taxable gain on the sale of the old assets. The taxes, which otherwise would have been due from the sale, are thus deferred. These can range from relatively simple transactions involving commercial, agricultural and rental real estate to more complex transactions involving aircraft, trucks, trailers, containers, railcars, agricultural equipment, other heavy equipment, livestock and other assets. Most 1031 Exchanges involve separate buyers and sellers and are not simple swaps between two parties. Under these circumstances, tax rules require the use of an independent third party Qualified Intermediary (QI). The QI holds the sale proceeds for the benefit of the taxpayer during the exchange, disbursing funds for purchase of like-kind replacement property, and returning any unused funds to the taxpayer at the end of the exchange. 1031 Exchanges must be completed within 180 days. Taxpayers recognize gain and pay tax on any unused funds or when they ultimately “cash out” of their property.
Like Kind Exchanges, also known as tax deferred exchanges, are defined by Internal Revenue Code (IRC) section 1031. A 1031 Tax Deferred Exchange offers taxpayers one of the last great opportunities to build wealth and save taxes. By completing a 1031 Exchange, the Taxpayer (“Exchanger”) can dispose of investment or business-use assets, acquire replacement property and defer the tax that would ordinarily be due upon the sale.
Since 1921, section 1031 has permitted a taxpayer to exchange business-use or investment assets for other like-kind business use or investment assets without recognizing taxable gain on the sale of the old assets. The taxes which otherwise would have been due from the sale are thus deferred.
A 1031 Exchange allows investors to defer Federal capital gains tax, state ordinary income tax, net investment income tax, and depreciation recapture on the sale of Investment property if certain criteria are met including:
There are many reasons to exchange, such as:
Tax rules for non-simultaneous exchanges require the use of an independent third party Qualified Intermediary (QI). Prior to the transfer of the old investment property, the services of a QI are retained to prepare the necessary documentation, securely hold your exchange funds and acquire your new investment property. The QI holds the sale proceeds for the benefit of the taxpayer during the exchange, disbursing funds for purchase of like-kind replacement property, and returning any unused funds to the taxpayer at the end of the exchange. Choosing a Qualified Intermediary (QI) to handle your exchange is a critical part of your 1031 Exchange. Not all QIs are the same. IPX1031 is the best choice for your 1031. Here’s why: