As we start this New Year, below are key trends, issues and points to remember regarding 1031 Exchanges.
be sure to read our newest 2022 trends – click here
1031 Exchange Trends and Market Update 2021
1031 Exchange trends for 2021 we are anticipating:
- Individual exchangers will continue to sell investment property and purchase Replacement Property in warmer climates or other locations with high vacation rental income.
- Continued increase of Replacement Property purchases of qualifying vacation home rental properties.
- An uptick in Build-to-Suit Exchanges where clients make improvements to their Replacement Properties.
- Reverse Exchange momentum will continue to grow with a shortage of Replacement Property inventory and a competitive buyer’s market.
- Retirement/Estate planning with Exchanged property will drive much investor 1031 transactional activity.
- Especially while the interest rates on financing are low and favorable, more clients will maximize 1031 potential to grow their portfolios by selling while the market is high, preserving their equity by using all proceeds to exchange into the purchase of larger or multiple Replacement Properties.
2021 Capital Gains Tax Brackets
1031 Exchange Checklist
Tax Straddling: Pay Taxes in 2021 or 2022?
If your transaction closed at the end of 2020 and you are unable to find new property to identify or purchase the property that you have identified, you may still be able to defer paying taxes on your capital gains until 2021. Since you will receive your 1031 funds back in 2021, in certain circumstances, since you did not have control/possession of your funds until 2021, the IRS may allow you to pay taxes on your 2021 tax return, which are due in 2022. This is in accordance with IRC Section 453(d) and requires your accountant to file specific tax forms. Ask your accountant if you are eligible to take advantage of this “mini” tax deferral.
Definition of Real Property – updated 12/2020
The IRS issued Final Regulations, TD 9935, effective Dec 2, 2020, defining real property for purposes of §1031. Read details here. Download PDF Exchange Topic here.
IPX1031 – Choose the Experts
IPX1031 focuses solely on 1031 Tax Deferred Like Kind Exchanges. As a national leader in 1031 Exchange services, IPX1031 has the financial assurances, security and expertise essentials to protect your funds and provide answers and guidance throughout the exchange process. When you choose IPX1031 as your Qualified Intermediary, you can be confident that your exchange will be facilitated in a professional manner and that your funds will be safe, secure, and available when needed. Contact IPX1031 to discuss your 1031 Exchange solution.
1031 Exchange and Defer? Or Sell and Pay Taxes?
Opportunities of the 1031 Exchange
How Important is Your Qualified Intermediary?
Capital Gains Estimator
IPX1031 Knowledge Center
Read PAST years’ 1031 trends
1031 Exchange Trends 2020
1031 Exchange Trends 2019
1031 Exchange Updates & Impacts 2018
1031 Exchange Trends for 2017
1031 Exchange Trends for 2016