Section 1031 Exchanges
Most investors know that IRS Code Section 1031 allows for an investor of real property to defer his capital gain on property he sells if he replaces it with other investment property(ies). In other words, you can trade an existing property for a new property or properties without having to pay taxes on your gain. The tax liability is deferred into the new property(ies). Done properly, a 1031 exchange is perhaps the most valuable tool for preserving the value of your investment portfolio. ALL of the proceeds of property you sell can be used to purchase exchange property, instead of only using what is left after paying taxes. This is a great opportunity for real estate investors to trade in their old income producing properties for newer, more profitable income properties without having to pay taxes on their capital gain (they defer).
What many investors don’t know is that there are virtually endless scenarios that could disqualify the exchange and trigger the capital gains tax liability. Todd Jackson has 15 years of experience dealing with taxation issues relating to real estate, specifically Section 1031 exchanges. Todd can guide you through the transactions to ensure that you avoid prohibited properties, prohibited transactions types, prohibited individuals and businesses, missed timelines, and other pitfalls that could trigger your payment of capital gains taxes instead of deferring them.