Commercial and Investment property sales remain robust and a growing number of sellers are structuring their sales as 1031 Exchanges. Rather than pay taxes that may be as much as 40% of the gain, by simply structuring their sales as 1031 Exchanges and purchasing new replacement properties, all of the following taxes can be deferred:
- Capital Gains – Your rate will vary based on your taxable income (15 to 20%). For 2019, your rate may be 20% if taxable income exceeds $434,551 (single) or $488,851 (married filing jointly).
- Net Investment Income Tax (NIIT) – If you have income from investments, including capital gains, you may be subject to a 3.8% net investment income tax on your adjusted gross income in excess of $200,000 ($250,000 if married filing jointly). Read more to see if this applies to you.
- State tax –You may be subject to state or local income taxes. State tax rates vary from 0% to the highest rate in California at 13.3%. See 2019 rates here.
- Depreciation Recapture – A flat Federal tax rate of 25% is applied for unrecognized gain due to depreciation.
Capital Gain Estimator
Use our Capital Gain Estimator tool that illustrates potential taxes to be paid in a taxable sale vs. a 1031 Exchange.
Tax and Legal Advisors
The calculation of taxes involves many factors and your individual situation may require additional variables. Speak to your tax or legal advisors.
IPX1031. The best choice for your 1031.
IPX1031 is the largest and one of the oldest Qualified Intermediaries in the United States. As a wholly owned subsidiary of Fidelity National Financial (NYSE:FNF), a Fortune 300 company, IPX1031 provides industry leading security for your exchange funds as well as considerable expertise and experience in facilitating all types of 1031 Exchanges. Taxpayers’ funds are held in segregated accounts at large stable banking institutions in the United States. Our nationwide staff, which includes industry experts, veteran attorneys and accountants, are available to help you and your legal and tax advisors. For additional information regarding IPX1031 and questions on 1031 Exchanges, please review: