oondi | Free Articles. Write for Cash.
|
Author: 1031exchange Published: 2008-09-28 13:22:36 Last edit: 2008-09-27 07:06:08 Tags: 1031 exchange 1031 exchanges 1031 tax exchange |
|
Section 1031 gives real estate investors a wonderful gift in the form of a tax deferral, a kind of 'interest-free loan' from Uncle Sam. This may give you cause to wonder why the government would see fit to do this. As a matter of fact, section 1031 is not a naked gesture of goodwill, but a calculated, mutually beneficial arrangement. Giving investors the ability to place their assets in the best investments possible stimulates the U.S. economy, creating new jobs and new opportunities for Americans.
The reasoning behind the prohibition of 1031 exchanges involving property in a foreign nation is clear, but things become a bit more hazy when you consider U.S. territories such as Puerto Rico, Guam, or the U.S. Virgin Islands. You are in fact permitted to make an exchange on a property in one of these territories, but it is essential to be cautious when making a transaction of this sort.
In private letter rulings relating to the U.S. Virgin Islands, the IRS has ruled that a property must be income-producing in order to meet like-kind requirements. This is a more constricted definition of a like-kind exchange than that which is normally applied to exchanges made on properties in the United States, which merely requires that your property be held for the purpose of business, trade or investment.
The path of least resistance when it comes to making a 1031 exchange is to confine your transactions to the United States, which comprise the fifty states as well as Washington D.C. In the event that you find it necessary to make an exchange on property located in an outside territory, I advise you to carefully analyze your replacement property to make sure it meets like-kind requirements. You may even want to request your own private letter ruling from the IRS.
United States investors can save their money by using a 1031 exchange to defer all of their capital gains tax on the sale of investment property. A 1031 tax exchange is almost like getting an interest free loan from Uncle Sam!
The reasoning behind the prohibition of 1031 exchanges involving property in a foreign nation is clear, but things become a bit more hazy when you consider U.S. territories such as Puerto Rico, Guam, or the U.S. Virgin Islands. You are in fact permitted to make an exchange on a property in one of these territories, but it is essential to be cautious when making a transaction of this sort.
In private letter rulings relating to the U.S. Virgin Islands, the IRS has ruled that a property must be income-producing in order to meet like-kind requirements. This is a more constricted definition of a like-kind exchange than that which is normally applied to exchanges made on properties in the United States, which merely requires that your property be held for the purpose of business, trade or investment.
The path of least resistance when it comes to making a 1031 exchange is to confine your transactions to the United States, which comprise the fifty states as well as Washington D.C. In the event that you find it necessary to make an exchange on property located in an outside territory, I advise you to carefully analyze your replacement property to make sure it meets like-kind requirements. You may even want to request your own private letter ruling from the IRS.
United States investors can save their money by using a 1031 exchange to defer all of their capital gains tax on the sale of investment property. A 1031 tax exchange is almost like getting an interest free loan from Uncle Sam!
Would you like to comment?
Related publications
1031 exchangeClassic Car Collectors - 1031 Exchanges Can Help You: If your investments lie in personal property such as collectible cars or other antiques, you may wonder whether the power of section 1031 can somehow be used to your advantage, and rightfully so, as t
What Investors Need To Know About 1031 Exchanges Fees: The general rule when it comes to 1031 exchanges is that all proceeds from the sale must be reinvested in the replacement property, but as a property investor you likely have experience with the other
Why You Don\'t Have To Pay Your Capital Gains Taxes: Many investors make the mistake of selling their business or investment property and end up having to pay thousands of dollars to the government in capital gains taxes. What they may not know that t
Debt Can Be Good With A 1031 Exchange: Although 1031 Exchanges are primarily used to shift our equity from one property to another, there are ways of recovering some of that equity for use as leisure or further investment purposes. There a
When It Comes To Taxes, 1031 Exchanges Are Key To Wealth Building: The 1031 Exchange process starts with your CPA or accountant. The discussion should include the amount of taxes owed if you sold the property outright. The adjusted basis would be determined, and base
What Investors Need To Know About 1031 Exchanges Fees: The general rule when it comes to 1031 exchanges is that all proceeds from the sale must be reinvested in the replacement property, but as a property investor you likely have experience with the other
Why You Don\'t Have To Pay Your Capital Gains Taxes: Many investors make the mistake of selling their business or investment property and end up having to pay thousands of dollars to the government in capital gains taxes. What they may not know that t
Debt Can Be Good With A 1031 Exchange: Although 1031 Exchanges are primarily used to shift our equity from one property to another, there are ways of recovering some of that equity for use as leisure or further investment purposes. There a
When It Comes To Taxes, 1031 Exchanges Are Key To Wealth Building: The 1031 Exchange process starts with your CPA or accountant. The discussion should include the amount of taxes owed if you sold the property outright. The adjusted basis would be determined, and base
1031 exchangesClassic Car Collectors - 1031 Exchanges Can Help You: If your investments lie in personal property such as collectible cars or other antiques, you may wonder whether the power of section 1031 can somehow be used to your advantage, and rightfully so, as t
1031 tax exchangeClassic Car Collectors - 1031 Exchanges Can Help You: If your investments lie in personal property such as collectible cars or other antiques, you may wonder whether the power of section 1031 can somehow be used to your advantage, and rightfully so, as t
Debt Can Be Good With A 1031 Exchange: Although 1031 Exchanges are primarily used to shift our equity from one property to another, there are ways of recovering some of that equity for use as leisure or further investment purposes. There a
Debt Can Be Good With A 1031 Exchange: Although 1031 Exchanges are primarily used to shift our equity from one property to another, there are ways of recovering some of that equity for use as leisure or further investment purposes. There a
RSS feed
E-mail updates