A 1031 exchange of investment or business real property provides significant tax benefits that many savvy investors use as part of a long-term wealth building strategy. But many people do not conduct 1031 exchanges, electing instead to sell their property in a straight-forward sale. In this article, we are going to talk about the tax consequences of electing not to do a 1031 exchange of your investment real estate.
Capital Gains Taxes
When you sell a piece of investment real estate in a straight-forward sale and pocket the cash proceeds, you will need to pay capital gains taxes on those net proceeds. Depending on the size and value of your property, this can result in a significant tax bill. A 1031 exchange allows you to defer this capital gains tax burden as long as you reinvest your net proceeds into a like-kind replacement property of equal or greater value, equity, and debt. The biggest consequence of not doing a 1031 exchange is that you need to pay hard-earned money to the government in the form of capital gains taxes. By doing a 1031 exchange, you get to keep your hard-earned money working for you in a continuation of your investment that compounds and builds wealth into the future.
Find the Right Qualified Intermediary for Your 1031 Exchange
Finding the right qualified intermediary for your 1031 exchange of real estate is essential to ensuring the success of your exchange. At CPEC1031, LLC our qualified intermediaries have decades of experience facilitating 1031 exchange transactions in Minnesota and across the United States. We can help you with the details of your 1031 exchange no matter where your property is located. Contact us today to learn more about the 1031 exchange process and see how we can help you save money in capital gains taxes when selling qualified real estate under section 1031 of the IRC.
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Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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