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Sep 08

Options – Getting Started & Next Steps

Some Things to be Aware of the 1031 Exchanges Some investors have been wise to such tax benefits of 1031 exchanges for a number of years. There are also people who are only new to the game and they actually wonder what all the fuss is about. They hear investors, realtors, attorneys and others say this but they are not very clear on what the process would include. To make it easy, the 1031 exchange would allow the investor to swap a business or such investment asset for a different one. Under such normal circumstances, the sale of such assets would actually incur tax liability on any capital gains. But, when you are able to meet the requirements that you can find in the section 1031 of such IRS tax code, you can then defer the capital gains tax. However, it is quite important to take note that such 1031 exchange is actually not a tax avoidance scheme. If you are going to sell a business or such investment asset and you don’t exchange this with another property, then you will have to settle the capital gains taxes. There are so many nuances to the 1031 exchange and this is the reason why it is really wise to seek some help from such professional experienced with the transactions. You are also curious about the basics and here are things that you should know before you would try such 1031 exchange.
Learning The “Secrets” of Options
You must know that this is not for personal use. Even if you are tempted to consider trading up your primary residence and avoiding the capital gains liability, the 1031 is only available for such property held for business or investment use.
Discovering The Truth About Options
There are some exceptions to such personal use prohibition. Just like most things in the IRS code, there are also exceptions to the rule. Know that personal residences don’t actually qualify, you may a successfully exchange such personal property like tenancy-in-common or that piece of artwork. You have to remember too that the exchanged property must be like-kind. This is one area that those new investors find confusing. The term like-kind doesn’t actually mean exactly similar but this means that such exchanged properties should be the same in use and scope. IRS rules can be liberal but there are various pitfalls for those who aren’t very careful. You should also keep in mind that the exchanges don’t happen at the same time. One really important benefit is that you can sell the current property and have around six months to close the acquisition of such like-kind replacement property. This is actually called a delayed exchange. When you want to complete such exchange, then you will need the help of an intermediary who is qualified.