Learn about how the year-end 1031 exchange works and what restrictions apply to exchangers.Under IRC §1031 individuals and businesses may exchange qualifying property for like-kind replacement property.Only property held for investment or for productive use in a trade or business qualifies for a like-kind exchange.Taxpayers need to be aware of all timing restrictions under Section 1031 of the Internal Revenue Code (IRC §1031).
There are several considerations when choosing a qualified intermediary for your 1031 Like-Kind Exchange.The regulations governing 1031 exchanges clearly articulate who cannot be your qualified intermediary.Knowing what not to do can assist you in finding the right qualified intermediary for your transaction.The role of a qualified intermediary (QI) is integral to a 1031 Like-Kind Exchange to manage the financial, administrative, and sophisticated reporting requirements.
1031 Like-Kind Exchanges offer businesses and investors the opportunity to maximize their return on real estate investments while minimizing their capital gains tax bill. Allowable under Internal Revenue Code 1031, Like-Kind Exchanges are used to defer the payment of capital gains taxes on the sale of real property. The basis of the relinquished property is transferred to the replacement property, thereby delaying the payment of the capital gains tax.