In this world, said the great Benjamin Franklin, nothing is certain but death and taxes. While modern medicine continues to work on a cure for mortality, 1031 exchanges offer a valuable mechanism against the foibles of the taxman. Allowing the exchange of one property for another, this property market trend can help you hold on to money that might otherwise end up with the IRS. How do you know whether you are eligible to take advantage of this great property trend?
The first stipulation is that the two properties involved in the swap be in use for trade or productive purposes, that is that they are moneymaking concerns of some kind, such as a rental property or holiday home. The property intended for swapping must also reside in the US, though it can be located at any point within.
1031 exchanges necessitate the involvement of what are known as Qualified Intermediaries, who deal with the paperwork involved in the switch, and assume a role akin to a property purchaser. The property to be exchanged is handed over to this intermediary, until the property owner locates a new property, at which point the switch can be made.
This type of property exchange...
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