The benefits of a 1031 exchange have been well-documented by CPAs and financial advisors as a wealth building strategy for individuals, trusts, partnerships and corporations — both United States residents and non-resident foreigners. The core of the strategy is the deferred federal, state and recaptured depreciation taxes, enabling the taxpayer to cash in on, an indefinite interest free loan given like-kind replacement property of equal or greater value is acquired and strict 1031 exchange rules are followed.
Exchange Blog
A 1031 Exchange Makes Sense When Selling Gold and Silver
A 1031 exchange allows the taxpayer to defer the recognized gain or capital gains tax when the metal or coin is replaced with like-kind precious metals or coins within 180 calendar days of the sale. The 1031 tax deferral is available to all federal income taxpayers, whether a United States resident or non-resident alien. What differentiates a 1031 exchange from a sale are the supporting documents created by the Qualified Intermediary, adherence of 1031 exchange rules and the condition that the taxpayer does not receive, pledge, borrow or otherwise obtain the benefits of the Exchange Account before the end of the Exchange period.
1031 Exchange: Seller Financing
Given the current tight credit market, taxpayers who want to initiate a 1031 exchange may consider financing or carrying a note for a Buyer to acquire the relinquished property. A 1031 exchange is a strategy to defer the federal and state capital gains and recaptured depreciation tax when selling and replacing property held for productive use in a trade, business or for investment. The tax deferral represents an indefinite, interest free loan that can defer upwards of 40 percent of the sales price. 1031 eligible property includes real property such as timberland, self-storage units, commercial property, single family residential, oil and gas royalty interests as well as personal property including aircraft, precious metals, vintage cars, artwork and collectibles.
1031 Eligible Medical Office Building in Charlotte, North Carolina
This 1031 eligible medical office building located in Charlotte, North Carolina is approximately 44,169 square feet on five plus acres. The building currently has long-term leases with Carolina HealthCare Systems and Christenbury Eye Center. Both tenants have long-term history within the building and have recently extended through 1/31/2023 and 9/30/2020, respectivley.
Selling Farmland or a Ranch: IRC Section 121 and Section 1031
When selling farmland or a ranch that has both a primary residence and land, it is important to consider the tax consequences of Internal Revenue Code Section 121 and Section 1031. Vacant land can be sold along with a primary residence, utilizing the $250,000 ($500,000 married filing jointly) exclusion given the property was owned and used by the taxpayer as the taxpayer’s primary residence for time totaling two years or more. The capital gain exclusion is available once every two years.
1031 Exchange and Delaware Statutory Trust
A 1031 Exchange Strategy for Highly-Leveraged Property Owners With Significant Tax Liability
Many commercial property owners find themselves in a situation where their loans are coming due or they need to refinance because their property is not performing sufficiently to cover their existing debt. Unfortunately, they are frequently unable to secure replacement financing due to their very high leverage needs, particularly in today’s challenging lending environment. An example of this would be a property that was purchased for $2,000,000 with a loan of $1,000,000 which has lost $600,000 of its original market value. Now, instead of 50 percent loan to value (LTV), the taxpayer has over 70 percent LTV, a degree of leverage that is not likely available to them in the present lending environment. And the truly gut-wrenching dilemma for the taxpayer is that even if they can negotiate a sale, the resulting tax bill can be disastrous, often as a result of the depreciation that has been taken.