Trieu Law can assist you with your tax-deferred exchange (commonly called a 1031 Exchange).
A 1031 Exchange allows you to sell an investment property and reinvest the proceeds in another investment property without paying the various taxes due at sale.
This process is straightforward but very rigid and any deviation from the allowed rules can invalidate the exchange, erasing any tax savings and potential exposing you to IRS penalties.
The core steps involved in the 1031 Exchange are that:
- The seller acquire “like kind” Replacement Property that will be held for investment or used productively in a trade or business
- The purchase price of the replacement propert(ies) be of equal or greater value to the relinquished property
- Any cash received at sale be reinvested into the Replacement Property
- Any debt on the Replacement Property must be the same or greater than was on the Reliquished Property
There are two key deadlines that the Exchanger must meet to have a valid exchange:
Within 45 calendar days of the transfer of the first Relinquished Property, the Exchanger must identify the Replacement Property to be acquired.
The Exchanger must receive the Replacement Property within the earlier of 180 calendar days after the date on which the Exchanger transferred the first Relinquished Property, or the due date (including extensions) for the Exchanger’s tax return for the tax year in which the transfer of the first Relinquished Property occurs.
Contact us for more information about how you can successfully defer taxes on your investment property transaction.