If you’re a seasoned real estate investor in Queens, you’re likely familiar with the concept of a 1031 exchange. If you’re just starting out on Queens real estate investment, then you’re probably eager to learn about the tax-deferral option. We’ve prepared a primer on this important tool for your investment-planning purposes.
A 1031 exchange, also known as a like-kind exchange or a Starker, allows you to roll over your capital from the property you have sold to the property you have recently purchased. The idea is that you would be able to avoid taxes until you sold your properties for cash at some later date, and ideally save some money by paying only one long-term capital gains tax. Even if your goals are not long-term but you are looking to save some money now, there is no limit to how often you can use a 1031 exchange, and paying little to no taxes with this type of transaction may seem mighty attractive.
There are two basic guidelines that apply to most cases. First, the value of your replacement property must be equal to or greater than the value of the property you have sold. And second, all of the net proceeds from your sold property must be used to buy your new “like-kind” property.
Along with these requirements, there are two timelines to keep in mind while processing a 1031 exchange. You have exactly 45 days from the day you sell your property to find potential replacement properties. This exchange of properties must be completed within 180 days of selling your former property. There are no extensions available, and if the required transactions are not completed within the number of days given, you will have to pay taxes on your sold property.
Above is a basic overview of 1031 Exchange. There are various processes, including delayed exchanges, depreciation recapture, and other deeper aspects of a 1031 exchange that could come into play, depending on each investor’s unique situation. Given the strict requirements and tight deadlines, most investors work with a tax advisor and an experienced Queens real estate professional when they are pursuing a 1031 exchange. (kiiky.com) We have many experienced buyer agents who frequently assist clients with 1031 exchanges in Queens County…
Source: UpNest