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1031 Exchange Attorneys

What is a 1031 Exchange?

In July of 1991, the Internal Revenue Service (IRS) finalized the rules governing Delayed Exchanges in Internal Revenue Code §1031, which reads:

No gain or loss shall be recognized on the exchange of property held for the productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.

The deferred exchange is an alternative to a common sale and purchase transaction. 1031exchanges provide investors with one of the best tax strategies for preserving the value of an investment portfolio. By using an exchange the investor is able to defer the recognition of capital gain taxes that would otherwise be incurred on the sale of investment property. The investor can then use the entire amount of the equity to purchase substantially more replacement property. To qualify as a 1031 exchange, the relinquished and replacement properties must be qualified "like kind" properties and the transaction must be constructed as an exchange.

Should I hire a 1031 Exchange Attorney?

A 1031 exchange enables you to defer capital gains and depreciation recapture taxes. The tax dollars saved may be maximized to increase cash flow and overall net worth. However, there are complicated laws and issues that can arise if the exchange is not properly done in accordance with the laws. You should consult with a taxation attorney and one that specializes in 1031 exchanges before starting an exchange.  A qualified Lead Counsel taxation attorney can help assure your 1031 tax exchange complies with all applicable laws or if you are interested in other investment real estate options.

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