For investing in commercial properties, there is no better place than in the San Diego Area. Contact a San Diego commercial brokers who can guide you toward more profits taking advantage of the 1031 exchange.
The 1031 Exchange, (the name comes from the Internal Revenue Code Section # 1.103) is a code that can end up saving individuals money on certain business and investment property transactions. ‘Profit’ taxes must be paid on real estate and personal property if any profits were made. There might be an exception, however.
The 1031 Exchange lets sellers of some real estate and personal property to be exempt from paying the ‘capital gains’ taxes if they are “exchanging” the property they sell, for a new property of “like-kind”. Usually this code applies to business property and investment property.
Just imagine selling a property which had been used as an office, and then buying a similar property to be used for the same purpose.Many types of profits will not be taxed. The new property doesn’t have to be the same size or type, as long as it is going to be used for the same purpose as the one sold.Real estate property purchased for investment purposes can be sold to buy a different property for investment purposes, without taxing the profit. The definition of exchanging for a “like-kind” property allows for some flexibility.
Some things to be considered are misc. time factors for example. Buy the new property within 180 calendar days of the sale of the original property.Make the sale and purchase as close in time as possible to be more efficient. The 1031 code requires an intermediary, who is qualified be used after 45 days of the sale to ensure that the gains are used towards the purchase of the new property. This prevents individuals from using the profit for their financial gain.
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