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Preserve capital by deferring taxes: An Introduction
to 1031
Thanks to Internal Revenue Code Section 1031, a taxpayer
may defer tax on the gain from the sale of property used
in a trade or business or for investment, provided that
he or she reinvests the gain in property used in a trade
or business or for investment. The language of §1031
is straightforward: "No gain or loss shall be recognized
on the exchange of property held for productive use in a
trade or business or for investment if such property is
exchanged solely for property of like kind which is to be
held for productive use in a trade or business or for investment.
A real estate professional equipped with knowledge of §1031
exchanges can offer valuable assistance to the investor.
It is important that the investor and all those assisting
the investor understand §1031 exchange variations and
the procedural facets of §1031 exchanges.
There are a few key rules for taking full advantage of
a §1031 exchange opportunity. First, all properties
involved should be of like kind. Second, astute real estate
investors will seek to exchange 100% of the value from the
relinquished property into the replacement property. Finally,
to take full advantage of the §1031 provisions, the
debt on the replacement property should equal or exceed
the debt on the relinquished property, or additional cash
from the exchanger can offset the replacement debt.
We offer this information to familiarize you with the §1031
exchange process and help you take full advantage of the
exchange options available. WTE Exchange Corp. is a qualified
intermediary for §1031 exchanges and stands ready to
assist you with your exchange needs. Please take this opportunity
to review this information and call us with any questions
you might have.
Our accommodator services can be used for traditional simultaneous
exchanges, delayed exchanges, reverse exchanges and other
exchange variations. WTE Exchange Corp. often facilitates
transactions in which a buyer or seller prefers not to be
directly involved in an exchange agreement, but is willing
to cooperate with the taxpayer or exchanger in completing
a tax deferred exchange.
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