1031 Exchanges – Ideal Move for Investors
A number of people love the idea of having an investment property but if time comes wherein you want to invest in another property by selling you’re the latter then you must consider 1031 exchanges. In 1031 exchanges you are given the chance to re-invest what you have earned from your investment property in accordance with the guidelines stipulated in the IRS code. Take note that everything that you gained from the sale must be invested into another property. The number of properties where you invested the entire amount of the sale will not matter; you just really need to invest everything that you gained from it. Before the sale can be completed, there will be a company that will act as the one that will keep all the funds until a “like-property” is found.
After selling the property, you are given 45 days to identify the property or properties that you intend to purchase using the proceeds. Now, to make sure that no one will take advantage of the situation certain precautionary measures are included. A good example of this is the so called 95% Exception rule. The rules states that whatever property you intended to purchase you must get 95% of it. Another rule that you must keep in mind is that if the sale property closes, you are given 6 months from the date to close on those properties you intend to purchase.
Almost all types of properties can qualify for a 1031 exchange except those used by people as their primary residential place. The use of 1031 exchange is a good kick off for those who are first-timers in the investment market. If you want to know more about these 1031 exchange guidelines along with the 1031 investment properties then the best thing to do is visit the IRS web page. This is also a good way to be acquainted with the best companies that can act as the third party of your 1031 exchange endeavor.
A number of people are into buy and sell of real estate properties without reconsidering the numerous advantage of using 1031 exchange that the IRS provide to them. Hopefully, this article was able to give an overview of the benefits one can get from 1031 exchange properties and how they work.
Most real investors make use of their money in other things or they usually keep it for future usage. The primary difference of acquiring properties through 1031 exchange and the conventional ones is that you can acquire properties without worrying about the tax. If you are able to sell properties and acquire one without the IRS bothering you then that would be very advantageous, don’t you think?