The Advantages of 1031 Exchanges
If you have plans on selling your investment property and invest its profit to another property the 1031 exchanges is your best option. 1031 exchanges also known as starker exchange is a section of the IRS code wherein the government allows you to sell your property to reinvest its profit into another one. Take note that everything that you gained from the sale must be invested into another property. No amount of money must be left behind with your sale as much as possible it should be re-invested; it doesn’t matter if you invest it in one property or in several. Before the sale can be completed, there will be a company that will act as the one that will keep all the funds until a “like-property” is found.
The time it takes for you to decide on which properties to purchase using the profit of the investment property you are selling is 45 days. There are certain things included in this process so as no one will take advantage of the entire situation. One the things included in this is the 95% Exception rule. The rules states that whatever property you intended to purchase you must get 95% of it. Another rule that you must keep in mind is that if the sale property closes, you are given 6 months from the date to close on those properties you intend to purchase.
Almost all types of properties can qualify for a 1031 exchange except those used by people as their primary residential place. If you are a first-timer in investment market then using 1031 exchange is something that you must highly consider. If you want to know more about these 1031 exchange guidelines along with the 1031 investment properties then the best thing to do is visit the IRS web page. There is also a list of intermediate companies that shall hold the funds of the investors along with accurate information about this exchange.
There are several advantage in using 1031 exchange unfortunately not all people are aware of this matter. Hopefully, this article was able to give an overview of the benefits one can get from 1031 exchange properties and how they work.
A number of people into real estate market make use of their gains in purchasing other things or for future use. The primary advantage of a 1031 exchange is that it’s non-taxable in other words you don’t need to pay any taxes compared to the normal procedures done in selling and purchasing new properties. This is really something beneficial on your part since the IRS will not bother you as you go on with the selling procedures.