A Real Estate Exchange or 1031, May Allow You to Keep All of YOUR MONEY from the Sale of Your Property

It said there are two positives in life, “Death & Taxes.” However, with a tax free exchange, a person looking to sell property can actually postpone paying taxes on said property gain, as long as it’s not actually sold. Huh! You may think, well here’s a small bit of information on how this works. Investing in real estate exchange allows you to re-invest the money you made from the sale of your property, tax free. If you just made a profit from selling a piece of property, or are looking to sell some property, but would like to postpone giving the IRS there share of your hard earned money, (and who wouldn’t) there is a way the IRS will allow you to keep the money you made free and clear and that’s were a real estate exchange or 1031 property exchange comes in. If you re-invest in an equal or higher-priced property than the one you just sold, the IRS will allow you to defer the payment of the capital gains taxes you would have to pay on the money you just made when you sold your property.

This could be an excellent investment for you and your family. A real estate exchange allows the money you just made to continue to work for you. You have 180 days to find investment property and buy it, then turn around and rent your new property out to tenants in a long term lease; they are responsible for the upkeep and maintenance of your property while they lease it. This means little to no headaches for you because your tenant is responsible for the upkeep and maintenance of the building for as long as they occupy it and all you do is collect their rent every month. A real estate exchange is an investment for at least two years, if you’re looking for a quick buy and sell investment, a real estate exchange is not for you.

This does not mean you can sit down with another property owner and just swap leases; just like anything else, there are rules to follow in a tax free exchange. No cash is exchanged, and a qualified intermediary needs to be hired and he or she takes care of the proceeds, and you cannot back out once the process gets started. Personal property, like the home you live in now, can not be exchanged unless you plan to rent the property. You have 45 days from the time you commit to a tax free exchange to decide on what property you want to exchange, and 180 days from that date to complete the deal. A tax free exchange may be a good investment for you because it allows you to buy larger properties without you actually having to come up with a dollar amount. If this sounds like a good investment for you, there are plenty of online websites that will help you decide if this is a right choice for you. This may be a good, safe way of investing your money, without worrying if your going to loose it or not. You will never know though unless you do some research to see if a real estate tax exchange is the right investment for your money.