1031 Exchanges – Ideal Move for Investors
If you have plans on selling your investment property and invest its profit to another property the 1031 exchanges is your best option. 1031 exchanges also known as starker exchange is a section of the IRS code wherein the government allows you to sell your property to reinvest its profit into another one. The entire amount of your sale must be re-invested into other property/proprieties. The number of properties where you invested the entire amount of the sale will not matter; you just really need to invest everything that you gained from it. In this matter, there would be a middle man or a third party that will hold the entire funds until one is able to find a “like-property” where the funds will be released and entire exchange will be completed.
The time it takes for you to decide on which properties to purchase using the profit of the investment property you are selling is 45 days. Now, to make sure that no one will take advantage of the situation certain precautionary measures are included. The 95% Exception rule is included in these safety measures or approach. In this ruling, you must get the 95% of the entire property that you initially want to purchase. The closing date of the identified properties is done once you have closed the investment property you intend to sell; the time frame is usually 6 months.
Almost all types of properties can qualify for a 1031 exchange except those used by people as their primary residential place. Most of the time 1031 exchange is perfect for those who are just starting out as investors in this kind of market. If you want to know more about these 1031 exchange guidelines along with the 1031 investment properties then the best thing to do is visit the IRS web page. There is also a list of intermediate companies that shall hold the funds of the investors along with accurate information about this exchange.
It is vital to know how advantageous these 1031 exchanges are rather than settling with the buy and sell of properties. Those are just the common things that you need to be aware of when dealing with 1031 exchange properties.
Most real investors make use of their money in other things or they usually keep it for future usage. The primary difference of acquiring properties through 1031 exchange and the conventional ones is that you can acquire properties without worrying about the tax. If you are able to sell properties and acquire one without the IRS bothering you then that would be very advantageous, don’t you think?