As the Real Estate Market Begins to Improve this Year 1031 Exchanges Can be a Way to Defer Taxes as Investors Cash in on Low Priced Deals
This week on Get Real, The Real Estate Investing Show for the Rest of Us, the spotlight was thrown on ways to defer tax implications on real estate investment sales. Amy Walsh from Certified Exchange Specialists was interviewed about the details on 1031 exchanges.
1031 refers to a section in the IRS tax code. This section allows for real estate investors to defer the capital gains taxes on their investment properties upon the sale of those properties. As the name infers the proceeds need to be reinvested in other real estate investment properties. As with any IRS code there are specific requirements for the proper execution of these exchanges.
Amy shared the five major requirements for these exchanges. They include holding to a rigid time line of 180 days to execute the transaction and having a property identified to purchase within 45 days of the sale of the old property.
Ms. Amy Walsh emphasized that the tax benefits are a deferral and not a tax deduction. Once the property is not longer exchanged into another investment property taxes will be due on all of the gains. She also explained a less known tax benefit for these transactions which is a deferral in the write off of depreciation which can be a large tax liability if the investor has owned the property for a long period of time.
For all of the details shared on the show about 1031 exchanges, visit http://www.getrealrei.com
Get Real, The Real Estate Investing Show for the Rest of Us is a top iTunes business podcast that can be heard at www.getrealrei.com , through a news reader at http://feeds.feedburner.com/GetrealREI or by searching for “get real real estate investing” through iTunes. Get Real provides a down-to-earth, real world view of real estate investing for current and future real estate entrepreneurs.
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