1031 Exchange Selling Real Estate In Los Angeles

Dated: 02/13/2017

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The Bottom Line On 1031 Exchanges

A 1031 Exchange allows real estate investors to defer capital gains taxes on a sale of an investment property. This can include any business attached to real property. The keyword is "similar kind". We will discuss this later. Ok, let’s move on. 

 A 1031 exchange, unfortunately is not available for a primary residence. However, if you ARE an Investor looking to sell and to acquire a more valuable investment property or buy closer to home, this is HUGE!! This will also work if you own a property in California and would like to purchase in another state!! (Awesome, right!)By deferring your taxes you can potentially be saving thousands! Thanks to the Hot California Market.

Contact Us for a private FREE consultation: (310) 231-6864

Jackie V – 1031 Exchange – Los Angeles

A few more reasons..

Leverage-Investors can utilize money they would have paid in taxes to increase purchasing power!

Consolidation/Diversification-The flexibility of an exchange allows an investor to exchange one property for several others, consolidate multiple into one, and acquire property anywhere within the United States!

Management Relief-At some point Investors that own several rental properties are often face with burdens of intensive management and/or costly maintenance- which often leads to headaches and stress. Owning a property in Los Angeles you may have at some point or another received a city notice or some of you code violations. We can help with those too!

Increased Cash Flow/Income-Cash flow and overall income can both be increased through a 1031 tax deferred exchange. Great example, Mr. Seller you own a piece of vacant lotland. At this point is isNOT generating any income. Now if you sold the lot you can exchange for a property that generates cash flow! Genius!!

Contact Us for a private Free consultation: (310) 231-6854

Jackie V – 1031 Exchange – Los Angeles

Generally, any real or personal property can be exchanged, provided it is held " for productive use in a trade or business" or for "Investment" and is exchanged for property "like-kind" that will also be held for one of these same purposes. The like-kind requirement is fairly broad for exchanges. Let me explain, for example, an office building can be exchanged for vacant land, an apartment building can be exchanged for a single family rental home, or a duplex can be exchanged for a retail strip center basically any real property held for investment qualifies as "like-kind". So long as it is in the U.S.A

The Bottom Line On 1031 Exchanges

Purpose of a 1031 Exchange-Defer payment of capital gains.

Property that can be Exchanged-Real property or personal property such as aircraft, vessels, equipment, or art.

Exchange Transaction-There are two parts to the transaction: "transfer" of relinquished property and the "acquisition" of the replacement property.

Fully Deferred Exchange-Many criteria must be met in order to have a fully deferred exchange. 1). Taxpayer must pay replacement property. 2). Taxpayer must reinvest all proceeds from the sale of the relinquished property(ies). 3). Taxpayer must re-acquire debt equal or greater to debt paid off from the relinquished property. (or replace the debt with additional cash)

Deadlines-There are two deadlines, both of which begin the date of transfer of the first relinquished property:1). Replacement property(ies) must be identified within 45 days. 2). The exchange must be complated by the earlier of: a) 180 days from the date of the first relinquished property closing; OR b) The due date of the taxpayers' federal income taxreturn, together with all extensions.

Identification Rules- Replacement property must be unambiguously described, made in writing, and signed by the taxpayer. The two most common identification rules are: 1)3-Property Rule- Up to three (3) properties can be identified without regard to their fair market value. 2) 200% Rule- Any number of properties can be identified, as long as their combined fair market value does not exceed 200% of the fair market value of all relinquished property.

Same Taxpayer-The taxpayer must acquire title to the replacement property in the same manner as title was held in the relinquished property. There are some exceptions to this rule such as entities that are disregarded for tax purpose.

If you are looking for more information on this topic OR would like a Free Consultation, contact us now! We are available on live chat! Click here for your Complimentary Estimated Property Value Report!

We are 1031 Exchange experts and can help navigate you through this money saving process!

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