Did you know that a taxpayer can delay, possibly indefinitely, paying capital gains taxes from the sale of investment real property?
IRS Code section 1031 allows taxpayers to defer the payment of capital gains taxes otherwise incurred when they sell real property held for investment purposes if the proceeds are reinvested in “like-kind” real property.
By jumping through some procedural hoops, a 1031 Exchange enables taxpayers to purchase “like-kind” property with the proceeds from a prior sale, without having to pay capital gains tax on the property sold at that time.
There are many different kinds of exchanges that can be utilized to help you achieve deferral of capital gains taxes, and each method has unique requirements and rules that must be met in order to qualify for tax deferral. 1031 Exchanges include simultaneous exchanges, delayed exchanges, reverse exchanges, and construction or improvement exchanges. Exchanges under Section 1031 of the Internal Revenue Code take time and planning, so it is important to consult a well-versed and experienced professional if you are considering a tax-deferred exchange.
At Bell, Orr, Ayers & Moore, we can assist you with your 1031 Exchange. Call us today.