1031 Exchange Information

A 1031 exchange is a swap of one investment property for another that allows capital gains taxes to be deferred. The term—which gets its name from Internal Revenue Code (IRC) Section 1031.

Learn More About 1031

A 1031 exchange is a swap of properties that are held for business or investment purposes. The properties being exchanged must be considered like-kind in the eyes of the Internal Revenue Service (IRS) for capital gains taxes to be deferred. If used correctly, there is no limit on how frequently you can do 1031 exchanges. Within 45 days of the sale of your property, you must identify the replacement property in writing to the intermediary.

You must close on the new property within 180 days of the sale of the old property. What If I have Cash Leftover? You may have cash left over after the intermediary acquires the replacement property. If so, the intermediary will pay it to you at the end of the 180 days. That cash—known as boot—will be taxed as partial sales proceeds from the sale of your property, generally as a capital gain. *If you are considering entering into a 1031 exchange, please be sure to reach out to a qualified Intermediary company prior to executing a contract. This will ensure you stay in compliance * For more information, please refer to: https://texas1031exchange.com

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