Many people who sell an investment property believe that federal capital gains from that sale must always be handed over to the IRS. This is not always the case. IRS Code Section 1031 offers investors the opportunity to reinvest federal capital gains from a sale if you swap that property for anotherand it does not always have to be for like property either! Instead, as an investor, you could have that money work for you rather than end up in the hands of the IRS. Further, you do not have to sell your property for the exact same type of property either!
The 1031 Code indicates that no gains or losses will be recognized on the exchange of any type of business use or investment property for any other business use or investment property.
So what does this mean? How can this help you?
If you own a business or an investment property you should consider a 1031 exchange. You would be able to defer 100% of both federal and state capital gains tax. 1031 Exchanges in essence become interest free loans; where the principal may increase through future exchanges allowing the Exchanger to never pay back, if the transactions are planned well. Along with...
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