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“I want to take this opportunity to thank you very much for your help and advice. You made this whole 1031 completely painless and you were extremely patient and helpful with my questions. I would not hesitate to recommend you to anyone without reservation.”
Andy Gustafson
What is a 1031 Exchange
A 1031 exchange is found in the Internal Revenue Code Section 1.1031. The tax deferral allows federal taxpayers, both U.S. and foreign, to postpone paying federal and state capital gains and recaptured depreciation taxes when selling and replacing property held in a trade, business or for investment. A 1031 exchange is an indefinite, interest free loan that can amount to more than forty percent of the sales price. The tax is ultimately due when the replacement property is sold unless another 1031 exchange is initiated.
Improvements to be Constructed in a 1031 Exchange
When a taxpayer plans to include improvements to be constructed in a 1031 exchange, the role of the Qualified Intermediary (QI) is extremely important. The Exchange Accommodator Titleholder (EAT) will hold the title to the property while the QI holds the cash included in the transaction while improvements are being made. The QI will then pay the vendors and contractors, and prior to the 180th calendar day post-closing on the old or new property, the EAT will convey title to the taxpayer.
1031 Real Estate Exchange Rules
1031 real estate exchange rules define how to go about deferring federal and state capital gains and recaptured depreciation taxes when selling and replacing a real property investment. A 1031 exchange, or Internal Revenue Code (IRC) Section 1.1031, allows any entity, both U.S. residents and foreign non-residents, to defer or postpone the payment given certain 1031 real estate exchange rules are strictly followed. The first step is to be aware that the taxes can be deferred indefinitely or until the replacement property is sold. Taxes, both federal and state, along with a twenty-five percent recaptured depreciation tax, can amount to upwards of 40 percent of the property’s sales price. If you could be given up to 40 percent of the real estate sales price interest free to use towards acquiring replacement property, wouldn’t you ask what the 1031 real estate exchange rules and requirements are?
Advance Auto Parts in Ridgeland, South Carolina 1031 Eligible
A 6,800 square foot Advance Auto Parts in Ridgeland, South Carolina is a 1031 eligible investment replacement property featuring new construction to be completed in October, 2012 and a 15 year net lease. Price is $1,317,057 with a capitalization rate of 7.0%.Continue reading
Advance Auto Parts in Hampstead, North Carolina 1031 Eligible
A 6,800 square foot Advance Auto Parts in Hampstead, North Carolina is a 1031 eligible investment replacement property featuring new construction to be completed in September, 2012 and a 15 year net lease. Price is $1,709,386 with a capitalization rate of 7.0%.