Conduct a 1031 Exchange
Todd Jackson Law
Looking for a legal professional adept in 1031 Exchanges? Consider Todd Jackson Law. Our firm, located in Franklin, TN, serves businesses and individuals throughout Tennessee.
1031 Exchanges - a great way to invest in real estate and defer tax liability
The beauty of investing in real estate is that there’s a lot of tax benefits on offer. Beyond the profit you can get from property investments, you can also take advantage of 1031 exchange, a proven and effective tax-deferral tool. 1031 exchange offers endless benefits to investors, but it is time and detail-sensitive. For that reason, you’ll need a trusted real estate lawyer to fully realize its power. Â
What is a 1031 Exchange?
From Section 1031 of the U.S. Internal Revenue Code, there lies 1031 exchange, your best option to defer taxes and minimize risks in real estate investments. 1031 exchange, also known as Starker Exchange or Like-Kind Exchange, is a properly structured tax-deferral tool that allows investors to sell properties, use the proceeds to buy new properties, opt for higher cash flow, and avoid paying capital gain taxes.Â
Â
1031 exchanges are used by many investors as a strategy, even outside real estate investments. In fact, investors who are already financially stable and prosperous still use 1031 exchanges to grow and diversify their portfolio, increase investment returns, and upgrade undesirable assets.Â
Â
There’s no doubt that 1031 exchange is a powerful tool. However, in order to access the full potential of its benefits, you need to have a comprehensive knowledge of the exchange process, as well as the terms and conditions inside Section 1031. And for that, you’ll need an experienced and specialized lawyer.Â
Â
Todd Jackson, one of the leading real estate lawyers in Tennessee, has a proven and tested experience in 1031 exchanges. Due to his decades of experience in real estate law, he already knows the specific rules you need to follow to conduct a legal and successful exchange. Todd can advise you on the tax benefits and consequences of 1031 exchange and assist you in selling, buying, and exchanging properties.Â
Â
As a firm, Todd Jackson Law can help you save money and enter new business opportunities through 1031 exchanges and other investment strategies. Your short-term and long-term goals are just within reach with Todd’s guidance.
Legal Matters
Frequently asked questions about 1031 Exchanges
Frequently we see clients in need of 1031 exchanges legal services. As subject matter experts, we frequently guide clients with the following types of questions. When in doubt, it is a best practice to consult with an experienced lawyer. Have a question about 1031 exchanges? Give Todd Jackson Law a call.
1031 exchange is about avoiding taxes, not evading it. So, no, it’s not a loophole in real estate law. You’re not cheating the system; you’re just taking advantage of its tax benefits and effective investment strategies. The IRS and Congress even encourage real estate investors to use 1031 exchange because it’s a potent economic stimulator backed by a sound tax system.
You’re eligible for a 1031 exchange if your property is held for “productive use” in a trade, business, or investment. Properties like condominiums, apartment buildings, and commercial buildings are qualified. Properties for personal use like principal residences, secondary homes, dealership properties, and partnership interests do not qualify. Further, both properties that are part of the exchange must be in the United States.Â
The 1031 exchange follows a critical time frame. As much as possible, don’t let it be delayed. So, if you want to undergo the process, immediately have your requirements ready. The exchange must be completed within 180 days, and the process starts after closing the deal. You have a 45-day window to ensure that all written requirements are complete, then you can finalize the transaction for the next 135 days.
Things to consider with 1031 Exchanges
Tennessee Law
If your personal or replacement property is in Tennessee, navigate and follow the state’s regulations on like-kind properties, property replacement identification, and 1031 exchange contract language. Real estate lawyers in Tennessee can expedite the process for you, so it’s best to hire lawyers based in the state.
Risks
It’s established that 1031 exchange is an effective tax-deferral tool. However, there are hidden dangers and potential risks in doing an exchange. Before and during the process, always watch out for time constraints, potential income loss, inconsistent cash flow, and illiquidity. Your real estate lawyer and exchange accommodator can help you minimize and avoid these risks.
Federal Law
Since 1031 exchange is part of Section 1031 of the U.S. Internal Revenue Code, you’ll need to comply with several federal laws on real estate sales and trades, especially those that affect properties categorized under “productive use”. Some examples are laws on mortgage, income tax, loans, and insurance.
Costs
There’s a lot of expenses involved in a 1031 exchange process. But if you’re strategic, you can earn them back in no time. In the meantime, you’ll have to allot funds on professional fees (lawyers, brokers, financial analysts), transactional expenses (real estate commissions, closing or escrow fees, transfer taxes), qualified intermediary fees, and non-exchange expenses (mortgage points, assumption fees, property taxes, utility charges).
Ready to work with an experienced
1031 exchanges lawyer?
Choose Todd Jackson.
trusted. certified.
Contact Us
3326 Aspen Grove Dr #400, Franklin, TN 37067
Hours: 8:30 am – 5 pm
M – F
