A 1031 tax deferred exchange allows you to roll-over all of the proceeds received from
the sale of an investment property into the purchase of one or more other like-kind
investment properties. At closing, proceeds are transferred to a third party--called a
facilitator or qualified intermediary--who holds them until they are used acquire the
new property. A 1031 exchange is often referred to as a Starker exchange.
Exchanges Allow You to Delay Capital Gains Taxes
Capital gains taxes are deferred if all of the exchange funds are used to purchase
like-kind investment property.
The deferment is like getting an interest-free loan on the tax dollars you would have
owed for a cash sale. More equity is retained, and that helps you move into properties
of higher value each time you perform a 1031 exchange.
What's Eligible?
A 1031 exchange is possible when you sell real estate held for investment purposes. It
cannot be used for the sale of your personal residence.
Like Kind Properties
Exchanged properties must be like kind. For a real estate exchange this means
real-property for real-property, but not necessarily land for land or a rental house
for another rental house. Take a look at the IRS rules for specific information about
what types of properties qualify as like kind.
You can exchange a single property for multiple properties, or purchase one property
from the proceeds of several. Proceeds not used to purchase new investment property
are taxed as a cash sale.
"In a like-kind exchange, both the property you give up and the property you receive
must be held by you for investment or for productive use in your trade or business." -IRS
For more information contact our office by phone 970.349.7625 or email
info@resortrealtycb.com.
RESORT REALTY GROUP
PO Box 3666 · 305 6th
Street · Crested Butte, CO 81224 · P:
970.349.7678 · Email: info@resortrealtycb.com
