A forward 1031 exchange is a valuable tax-saving tool that any investor can utilize. Call today to speak with one of our St. Cloud forward exchange professionals and get the help you need with your 1031 exchange – 612.643.1031.
St. Cloud Forward 1031 Exchanges – A Primer
A 1031 exchange is a tax deferral strategy within the Internal Revenue Code that allows investors to defer the capital gains taxes on the sale of property, so long as they re-invest those gains into bigger and better property.
Forward Exchange Rules
To complete a successful forward exchange in St. Cloud there are a handful of requirements you need to satisfy.
- First, you need to have the right intent when selling the property. Remember that 1031 exchanges can only be used for property that has been used in your trade or business. You can’t do a 1031 exchange on your own family home because you likely haven’t been using it for business purposes.
- Second, you need to abide by the 1031 exchange timeline set by the IRS. Essentially you have 180 days in total to complete your exchange. That timeline begins the day after you sell your relinquished property. You have the first 45 days of that total 180 days to identify the replacement property that you intend to purchase. Failing to hit these deadlines will result in an automatic failed exchange.
- Third, your relinquished property and your replacement property both need to be like-kind. In real estate that basically means they both need to be real estate. With personal property, the definition of like-kind is a lot tighter.
- Lastly, you need to make sure that your new property is equal to or greater than your relinquished property in value, equity, and debt.
These are the four most important rules to keep in mind with your 1031 exchange, but they are certainly not the only rules. Make sure you consult with a qualified intermediary to make sure you are satisfying all of your requirements.
St. Cloud Forward Exchange Company
Forward exchanges can be complex for taxpayers who are unfamiliar with the Internal Revenue Code. We’ve seen many well-meaning investors make mistakes and end up with a failed 1031 exchange. Don’t make these mistakes – hire a qualified intermediary to help you through your exchange. Contact our St. Cloud qualified intermediaries today to get the assistance you need throughout your 1031 exchange process – 612.643.1031.