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1031 Tax Exchange: Your Path to Tax-Savvy Investing

Real Estate SOS

2 min read

Dec 31, 2017

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Today, we’re diving into the world of tax strategies with a focus on the 1031 Tax Exchange. This might just be your golden ticket to deferring taxes while upgrading your investment portfolio. So, let’s break it down into easy-to-understand steps and see how you can leverage this to your advantage.

Step 1: Sell and Set Sights on New Horizons First off, you sell your investment property. But here’s where it gets interesting. Instead of pocketing the cash and paying capital gains taxes, you’re setting your sights on a new property.


Step 2: Identify Your Next Move Within 45 days after selling, you need to identify potential replacement properties. It’s like matchmaking for real estate – you’ve got to pick wisely and quickly!


Step 3: Seal the Deal Now, you’ve got 180 days to close the deal on your new property. Timing is crucial, and it’s what makes this exchange possible.


Step 4: Enjoy the Tax Break By rolling your investment from one property to another, you defer paying taxes on any profit you’ve made. It’s like pressing the snooze button on taxes.


Step 5: Aim High The new investment must be of equal or greater value, and you need to reinvest all of the proceeds. It’s all about moving up in the real estate world.


This strategy isn’t just smart; it’s a powerful way to grow your investments while keeping Uncle Sam’s hands off your profits—for now. Remember, the goal here is to keep climbing the real estate ladder, deferring taxes as you go.


Before you dive in, though, make sure to consult with a tax professional or a 1031 exchange specialist. They’ll help you navigate the rules and deadlines to ensure your exchange is smooth and compliant.



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