If you own investment property and want to save on taxes, you may want to do a 1031 exchange.
1031Exchanges & Tax Deferred Savings
A 1031 Tax Deferred Exchange or Real Estate Exchange is an extremely powerful investment technique which allows your tax dollars to remain invested in property rather than being paid out as income tax. 1031 exchanges allow a buyer to leverage the deferred tax savings into alternative real estate properties to create wealth.
Section 1031 of the Internal Revenue Code states “No gain or loss shall be recognized if property held for productive use in a trade or business or investment purposes is exchanged solely for property of a like-kind.”
How 1031 Exchanges Work:
Single or multiple properties may be exchanged in the 1031 Exchange transaction.The first step of the exchange occurs when the relinquished property sells and the proceeds are held by a “Qualified Intermediary”. Bankers Escrow Corporation is your safe and secure qualified intermediary with Fidelity bonding and segregated money market accounts at FDIC insured banks for each exchangers funds. All interest earned is paid to the exchanger.
The second step involves identification and purchase of replacement 1031 Exchange property. An Exchange Agreement must be set up prior to any sales transaction.
Specific requirements defined in Section 1031 include a 45 day identification period, a 180 day period in which to close on a replacement property and the use of a “Qualified Intermediary” as the taxpayer cannot receive any proceeds from the sale of the relinquished property either actually or constructively.
Understanding how the 1031 exchange process will affect your realestate transaction is very important. Bankers Escrow Corporation provides assistance in identifying potential problems and areas of concern for agents or investors whom lack experience in exchanging.
Bankers Escrow Corporation’s experienced staff of CPA’s, Certified Exchange Specialist and escrow officers will process exchange documents within the same day with the goal of making your exchange easy, convenient and inexpensive