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What to Know About 1031 Exchanges

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. 1031 exchanges also known as starker exchange is a section of the IRS code wherein the government allows you to sell your property to reinvest its profit into another one. Take note that everything that you gained from the sale must be invested into another property. No amount of money must be left behind with your sale as much as possible it should be re-invested; it doesn’t matter if you invest it in one property or in several. 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. One the things included in this is the 95% Exception rule. In this ruling, you must get the 95% of the entire property that you initially want to purchase. 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.

The properties involve in 1031 exchange must be classified as investment properties and not the primary residential area of the user. If you are a first-timer in investment market then using 1031 exchange is something that you must highly consider. 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.

A number of people into real estate market make use of their gains in purchasing other things or for future use. The primary difference of acquiring properties through 1031 exchange and the conventional ones is that you can acquire properties without worrying about the tax. This is really something beneficial on your part since the IRS will not bother you as you go on with the selling procedures.

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