What Qualifies As A 1031 Exchange?
Posted by Techyscouts | Posted on 11/15/2020
With the Mike Millea real estate team, your investment property and probate real estate expert, we want to maximize your investment properties and ensure you are getting the most out of the current tax laws for investment properties. This is especially important when considering a 1031 exchange. New to this concept? Don’t worry, Mike Millea will walk you through the details of this real estate investing tool!!
What is a 1031 Exchange?
In its simplest terms, the 1031 exchange allows an owner to sell one investment property while purchasing another property and deferring the taxes. These taxes include federal capital gains, state capital gains, and the recapture of depreciation. So it’s a pretty big deal for people who own an investment property.
The 1031 exchange falls under the “Like-Kind” exchanges. A Like-Kind exchange means you can exchange two real estate properties while deferring the taxes associated with each property. The transaction between these Like-Kind properties allows you to get around the burden of paying various taxes on the sale of your investment property.
Eligibility for a 1031 Exchange
In order to be eligible for a 1031 exchange, the property must be for productive use like a trade, business, or investment. Examples of a property for productive use and investment include apartment buildings, vacant lots, and commercial buildings. Unfortunately, property held for solely personal use can not be used for a 1031 exchange. There are a few loopholes to this law like selling a vacation home that was used sparingly by the owner. For gray areas like this, don’t hesitate to contact Mike Millea and we will work out the details and confirm if you are eligible.
Contact Mike Millea for All Your Real Estate Investing Needs!
If you are interested in furthering your real estate investing, contact Mike Millea and his team. We will be sure to walk through your investing options and answer any questions you may have. We look forward to hearing from you soon!