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Tuesday, October 07, 2008

1031 Exchange

Section 1031 is the provision of the Federal Income Tax Code that permits companies and individuals to exchange property of a like-kind without incurring any liability for paying capital gains tax dues. An exchange does not generate cash. Therefore, it is unfair on the taxpayer to ask him or her to pay tax on unrealized gain or “paper” gain. The taxpayer’s investment is essentially the same, only the form changes. For example, exchange of land for building. 1031 Exchange is one of the few techniques available to postpone taxes. The taxpayer has to pay taxes when the property is sold for cash. On the other hand, since an exchange does not generate cash, no tax is owed immediately. 1031 Exchange is the network for all of your 1031 tax needs. They connect you with sellers of 1031 exchange properties. For more information visit www.1031.net.

1 comments:

David said...

Great Post.

One disturbing trend that people should also be aware of in 1031 exchanges is abuse and mismanagement of money by exchange companies. I encourage everyone to thoroughly vet any potential qualified intermediary.

Consider working with a 1031 exchange company that deposits your money only in money-market accounts that invest in government backed securities. With uncertain market conditions, it’s the only way to ensure your money will be there when you need it. I only know of one such company, RockSolid 1031. You can check out their website at www.RockSolid1031.com.