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Buying or Selling Investment Real Estate–Consider a 1031 Exchange

To 1031 or not 1031If You are Buying or Selling Investment Real Estate (nearly anywhere in the U.S.) You Need to Know about Exchanges

Whether you are selling investment property in the Corvallis or Albany, Oregon area or are selling elsewhere and considering a purchase here, you do not want to overlook the possible tax benefits of a 1031 Exchange (also known as Delayed/Tax-Deferred/Tax Fee/Like Kind/Starker exchange).  This is a means of liquidating investment property and avoiding tax on the gain and/or tax on recapture on depreciation. There are a ton of rules to follow (it’s the IRS after all) and a myriad of other considerations that cover anything from type of property to the mechanics of the exchange (timelines), relationships of related parties, partial exchanges, reverse exchanges and if it worth it to exchange at all.  But, the benefits may be well worth the effort.

There are a lot of myths associated with exchanges. For example, you may be surprised that like-for-like does not mean the same as identical; the replacement property does not necessarily have to cost more than the exchanged property (costs of sale have an effect and partial exchanges are a possibility); and an exchange does not have to be a trade directly between a specific buyer and seller.

Here’s a helpful tool in finding your way through the concept.  1031 Exchange Check List  Before making a final decision to exchange or not exchange, get advice. There are many creative (and legal) ways to make an exchange work for you.

If you are interested in Selling locally or Buying locally and being involved in an exchange, I’m here to help.

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