A Successful Tax-Deferred 1031 Exchange for Real Estate



A Successful Tax-Deferred 1031 Exchange for Real Estate

Success! A manufacturer was closing down and selling an obsolete facility for $2 Million, and planned to purchase a new facility for $3.5 Million. The tax basis of the relinquished property was $1.3 Million resulting in a potential taxable gain of $700,000…. How did this go? A Successful Tax-Deferred 1031 Exchange case study.

As a company grows and prospers, it may decide to sell real property that no longer serves its needs, and replace it with more suitable real property. If a disposition and subsequent replacement of real property is structured properly, taxpayers can utilize IRC Section 1031 to defer the capital gain or depreciation recapture due from the sale of relinquished property.

Our expertise is 1031 Exchanges. Section 1031 of the U.S. Internal Revenue Code allows investors to defer capital gains taxes on the exchange of like-kind properties.

To successfully structure and complete an exchange of real estate under IRC Section 1031, there are many critical details that need to be considered:

  • Replacement Property – Do you know what you are going to purchase in order to replace your relinquished property?
  • Timing — Do you have exchange timing issues? Are you buying before selling?
  • Other taxes — How do transfer taxes affect the cost of your exchange?
  • Value — Are you selling for more than you are buying? Will you make improvements to the replacement property? What are your options to maximize your tax deferral?
  • Deposits — How are they held? Are you in constructive receipt of sales proceeds?

Give us a call to help guide you through this process to make your exchange the most successful transaction possible on aircraft, property and real estate.

Contact Us: +1 978.610.1234.

A Successful Tax-Deferred 1031 Exchange case study.

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