In the year 1991, the IRS printed publication that outlined the specifics of the 1031 tax exchange rule. There are specific specifications that you need to meet to qualify for the 1031 tax exchange rule. The properties that you sell should fit under a particular category of the IRS code. The property should be under the real estate which is held for business use or the land used for the investment. This is essential to note you are not able to use this so that you can exchange your residence or any properties that you may want to flip. The two fall in the category of land held for personal residential and the land which is held primarily for sale. These properties that you hand over must be exchanged for other properties that are similar. Make yourself one of the luckiest person who learn about the 1031 tax exchange rules.
The other specific of 1031 tax exchange rule is there should be an actual exchange of the properties. You are not supposed to trade money for property on what is classified as a sale what you do is that you sell the property and then you buy another property that meets the particular specifics relating to this rule. The other thing so that you can qualify is that one must qualify as an intermediary. There are firms which are licensed as qualified intermediaries that you might want to use. One also has a period of 45 days window from when they sold their property. Then when you are close to completing the property sale, then you have to start searching for a property that looks like because you have to look for a property that looks alike and within the shortest time possible. Use the 180 days period that you are given when the property is sold as well. 1031 refers to the real estate transfers. This means that after you meet the specifics, the property owners can exchange their properties with others which are alike so that they can replace the property. The IRS will look at the transaction as having reinvested their sale proceeds into replacing with another property; this will mean that no economic gain has been replaced that is going to generate you any funds for paying the taxes. If you are interested in 1031 exchange rules , please click the link provided.
The properties that are which are of the same kind can either be unimproved or improved. This exchange is what provides a means for the exchange, and the sale of the property and the proceeds will go to the qualified intermediary, and they will hold the funds until they get a replacement property when it is ready to be purchased. Click the link for more info about 1031 tax rules https://www.huffingtonpost.com/phil-jemmett/pros-and-cons-of-a-1031-t_b_4415703.html.