Normally, when an investor sells property, it is required that taxes are paid on the capital gain. However, property that qualifies for preferential treatment under Internal Revenue Code Section 1031 (IRC 1031) is treated quite differently. "No gain or loss shall be recognized if property held for productive use in a trade or business or for investment purposes is exchanged solely for property of a "like-kind". The underlying philosophy behind an exchange is that income tax should not apply as long as an investment remains in tact in the form of real estate.

Imagine selling rental property or land, acquiring new like-kind real estate and not paying any capital gain taxes! Many people who invest in Summit County take advantage of this tax deferred transaction. Deferral can range anywhere from a simple exchange of two properties to a complex, multi-transaction involving a simultaneous, delayed, reverse or construction exchange. The investment strategy and the nature of the transaction will decide which exchange best suits your needs.

Concerning time requirements, for example, in a delayed exchange, the replacement property must be designated within 45 days of closing escrow on the relinquished property and must close within a total of 180 days.

If you would like to discuss this topic further or request further or additional information, Call Steve at (970) 668-8650 or CLICK HERE to E-Mail him. Steve knows it best!