Greg Smith, Esq.
Kansas, Kentucky, Missouri & Ohio
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1031 Resources & Information
1031 Tax Tip: Taxes Are Brutal
G6 Restrictions in a 1031 Exchange
What are the benefits of doing an exchange?
The benefits of doing a 1031 Exchange are far too numerous to list, but I give a few examples. Of course, no one wants to pay taxes that they are not required to pay. So the best known benefit of a 1031 Exchange is the ability to reinvest 100% of the proceeds from your sale into the purchase of your new real estate without losing huge chunks of your investment dollars to the state and federal taxes. Another important example is the ability to switch types of real estate investment. You might sell non-income producing land and acquire income producing commercial or residential property. Another example is the ability to relocate your investment properties. Maybe this would result because you moved and you want your properties close to you, or maybe you just think another part of the country is a hotter marketplace and you will reap larger profits.
How do I know if a 1031 is right for me?
There are a few steps to determine if a 1031 Exchange is right for you. Step 1 is to verify that you have a taxable gain on the property that you are selling. In most cases, this means that are selling the property for more than you paid for it, but there are other factors. You could even be selling the property for less than you paid for it and still owe a large tax based on depreciation recapture taxes. Step 2 is to consider whether you would rather pay the state and federal taxes or be able to reinvest 100% of your proceeds into investment real estate. For more information, give me a call at (614) 477-1301
Are there special 1031 rules/regulations for Kansas, Kentucky, Missouri or Ohio?
There are no special requirements for doing a 1031 Exchange in Kansas, Kentucky, Missouri or Ohio.
What property types can be exchanged into and out of? What is Like Kind Property?
Many people are confused by the term “Like Kind Exchange.” Before the Tax Cuts & Jobs Act a few years ago in 2017, 1031 Exchanges could be used for almost any asset with a capital gain. Now 1031 is only for real estate and the like kind rules are extremely flexible. Any real estate that is used in a business or held for investment can be exchanged for any real estate that is used in a business or held for investment. You can sell a rental property and buy an office building. You can sell a shopping center and buy a farm.
I just sold a property and want to purchase another one. Can I use that recently sold property in an exchange?
Any 1031 Exchange MUST be set up prior to the first closing, so in this case, you could not use that property in a 1031 Exchange. One of the most important rules of a 1031 Exchange is that the exchanger can’t even have the right to receive the proceeds from the sale. The Qualified Intermediary (what IPX1031 is called) is assigned into the contract to become the seller. The proceeds are wired directly from the title or escrow company into the exchange account that IPX1031 sets up on the exchanger’s behalf.
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With an office near Columbus, Ohio, IPX1031, the nation’s largest exchange facilitator and accommodator, provides industry leading exchange services including guidance, expertise, security and key information on 1031 Exchange rules, regulations and strategy. 1031 Exchange expert, Greg Smith offers you customized solutions to defer capital gains tax and maximize equity in your 1031 like kind investment property.