1031 Exchange Rules To Defer Capital Gains Taxes #56
Did you know that there are steps you can take to defer capital gains taxes on your rental property? If you own or are considering buying a rental property, you want to make the most of your investment. I’ve come up with some helpful tips that you can use to make sure you aren’t overpaying when it comes to your capital gains taxes. What are you waiting for? Grab your pen and paper, you don't want to miss a minute of this informative episode!
You will want to hear this episode if you are interested in...
Understanding what a 1031 exchange is [1:18]
How depreciation works [6:00]
A “like-kind property” [7:30]
Avoid paying unnecessary taxes [12:00]
Ownership structures that can be used for a 1031 exchange [14:00]
Next steps you can take [18:00]
Closing thoughts [19:20]
Using a 1031 exchange
Deferred taxes on a rental property? Sounds too good to be true! Using a tool in the IRS code called, a 1031 exchange, savvy men and women like you can enjoy deferred taxes on your rental property. In short, a 1031 exchange allows you to avoid paying capital gains taxes when you sell an investment property and reinvest the proceeds from the sale within certain time limits in a property or properties of like kind and equal or greater value. Is taking the plunge and going for a 1031 exchange the right step for you? If you are ready to dive into this complex topic with some helpful tips, you’ve come to the right place!
Where to start?
If moving forward with a 1031 exchange is in your future, here are some steps you can take to get started on the right foot. If you haven’t already, make sure to connect with a good accountant who can help you with getting your finances in order for this new process. After speaking with your accountant, you’ll want to find a qualified intermediary - if you can’t find one, try looking for one in a state that was mentioned that has safeguards in place. Make sure to hire that intermediary BEFORE you sell your property so you can use the 1031 exchange. Finally, don’t forget about the two important dates when it comes to a 1031 exchange,
45-day rule - Within 45 days of the sale of your property, you must designate the replacement property in writing to the intermediary, specifying the property you want to acquire.
180-day rule - You must close on the new property within 180 days of the sale of the old.
To hear me expand on how to get started with a 1031 exchange and so much more when it comes to finances and retirement, make sure to listen to this episode!