Monthly Archives: May 2018

The Mechanism of 1031 Tax Deferred Exchange

When an investor sells the property (relinquished property) in a 1031 tax deferred exchange, a Qualified Intermediary (QI) holds the funds gained from the sale. The investor then directs the QI to purchase a new property that is either equal or higher in value than that of a relinquished property. By this method, the investor is saved from paying the capital gain taxes that he otherwise would have had to pay over the sale of the relinquished property. Without 1031 like-kind exchange, the investor will always have to pay capital gain taxes every time he moves from one property to another. Additionally, saving up on capital gain taxes puts the investor on a better road to become wealthier.

 

Here are some things you should know about 1031 like-kind exchange:

  1. 1. Personal residences cannot be exchanged in a 1031 tax exchange. 1031 like-kind exchange is a provision for investment and business properties only.
  2. 2. You need to buy a replacement property that is equal or higher in value than that of a relinquished property.
  3. 3. You will need a Qualified Intermediary to carry out the 1031 like-kind exchange.
  4. 4. You are required to identify a new property after the closing of your relinquished property.
  5. 5. You are also required to close in on one or more identified properties within 180 calendar days of the closing of your relinquished property.

 

If you are looking for a 1031 exchange company in Massachusetts, look up to FAI Exchange.

 

FAI Exchange caters realtors and business property investors who are looking for ways to defer capital gain taxes. FAI Exchange’s skilled and talented staffs will always be there to explain you every aspect of 1031 like-kind exchange. Our services also include preparation of documents with all appropriate forms required for a smooth 1031 like-kind exchange to happen.

What Is A 1031 Tax Exchange and Who All Benefit From It?

Deferring capital gains taxes is no longer a problem. If you have heard about the 1031 tax exchange, you probably know how easy it is to defer capital gains taxes. With the introduction of 1031 tax exchange the rise in real estate businesses and property dealing businesses is prominent. With a 1031 tax exchange, you can easily sell your old property and buy a new one without paying capital gains taxes. However, there are certain criteria that you have to fulfill.

The 1031 tax exchange greatly helps realtors and business property investors. As these businessmen do not have to pay taxes, they are easily able to sell their old property and invest in a new one. This helps them stack up their profit in the coming years.

The 1031 tax exchange is a very easy process but involves the need for a Qualified Intermediary (QI). Once you meet the required criteria, you can proceed with selling your old property and the money you earn is kept with the QI you hire. This QI is then directed by you to purchase a new property.

There are certain things that you should keep in mind while dealing in a 1031 tax deferred exchange:

  1. The price of the new property that you buy should be equal or higher than that of your old property that you sell.
  2. After the exchange, you have 45 calendar days to identify a new property and you can identify up to 3 properties.
  3. You also are given a total of 180 calendar days to close in on your identified property.

With Fai Exchange, the entire process of 1031 tax exchange becomes a whole lot easier. We become your Qualified Intermediary and also help you in arranging the necessary documents for the exchange to happen.