A 1031 exchange is a way to delay taxes on the sale of one property by purchasing another. It applies to business or investment real estate. When utilized properly, it can result in dramatic savings. This blog provides the advantages of tax deferred 1031 exchanges in Franklin TN.
You must own qualified real estate in order to consider a tax deferred 1031 exchange. Qualified properties are ones used in a business or for investment purposes. It can be rental, land, residential, industrial, and commercial real estate. You must also buy new like-kind real estate that is also qualified.
Advantages Of Tax Deferred 1031 Exchanges In Franklin TN
Typically, when you sell an investment property, you must pay capital gains taxes on the profits from the sale. This is true despite what you intend to do with that funds. Taxes can be levied by the federal and state government. Depending on how many years you owned a property and the amount of equity, the taxes levied may be quite large. A 1031 exchange gives you a means to redirect the equity from one property directly into buying a new similar property and defer capital gains taxes until you sell that new property. Actually, a 1031 exchange can be an option on that other sale to defer taxes even further.
Considering a 1031 Exchange
There are many components to a 1031 exchange that you should understand BEFORE going to sell a property. 1031 Exchanges are not something that you may complete after the fact. You must intend to complete an exchange when selling. Particular guidelines must be observed to conform to the exchange. This includes deadlines for narrowing down and purchasing replacement property. A qualified intermediary must also be involved to facilitate the process. If a deadline is missed, all applicable savings is lost. Speak with a knowledgeable 1031 exchange consultant for help with 1031 exchanges and to reap the advantages of tax deferred 1031 exchanges in Franklin TN.
For more information, contact Jim Eaton at Blueprint Realty, Inc. at Cell/Txt: (615) 519-5515 / Office: (615) 538-8328 or [email protected]