1031 Exchange Rules And Property Laws
If you are a real estate investor it is in your interest to do your home work on 1031 exchange rules. It could save you many thousands of dollars in taxes, and could help you avoid many of the pitfalls and problems associated with 1031 exchanges. By doing a little research you can maximize and optimize your tax deferrals.
Dead line are by far the most important thing to know about 1031 exchange rules. It is crucial to purchase a new property within the given 180 days after you have sold your property. Further more, there is a 45 day period in which you must identify one of the properties you are attempting to exchange!
To maximize your tax deferrals, all of the cash from the sale of the property must be reinvested into the new property. The 1031 exchange rules state that you cannot use proceeds from the sale to pay for expenses that are not part of the exchange. To get the maximum tax benefit from these expenses you should handle them on a separate part of the settlement and footnote them and write a separate check to the buyer.
It is hard for a state to get all the contact information of someone who does not live there. Therefore, if you live in one state but buy property in another state, most locales will require your closing agent, broker, or real estate agent to withhold a percentage of the sale price to be applied to your tax bill.
For foreigners the real property tax act that was enacted in 1980 requires the payment of at least a ten percent withholding of the sales price. Depending on which state you are in this requirement may be waived, so it is wise to check the laws of the state your in.
You must use a qualified intermediary who completes all the necessary paperwork and filing and must adhere to the 1031 exchange rules. There are many places on the internet where you can find 1031 exchange information and you can even find qualified intermediaries in your state.
Go to http://www.investing-secrets.com/1031-exchange/recommends/article-1031 to get hold of a copy of this article for your own site.
If you are a real estate investor it is in your interest to do your homework on 1031 exchange rules. It could save you many thousands of dollars in taxes, and could help you avoid many of the pitfalls and problems associated with 1031 exchanges. By doing a little research you can maximize and optimize your tax deferrals. You are obligated to purchase your replacement property only one hundred and eighty days following the transaction has been filed, or prior to the next filing cutoff. You can easily get 1031 tax exchange information online and locate the nearest competent intermediaries.
- David E. Williams
