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Author: 1031exchange Published: 2009-03-22 11:35:13 Last edit: 2009-01-28 01:40:37 Tags: 1031 exchange 1031 exchanges 1031 tax exchange |
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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 the sale of collectible property incurs a whopping 28% capital gains liability. Luckily, the answer is yes; though not many are aware of the possibility, 1031 can be made on certain types of personal property, including classic cars, and in light of capital gains rates, those with money in these kinds of investments stand to benefit greatly from the use of section 1031.
While an exchange involving personal property is conducted in much the same way as a real estate exchange, it is important to note that in a personal property exchange, one has less leeway in terms of what will fulfill like-kind requirements. If you are exchanging a car, you will only be able to exchange it for another car of equal or greater value. The same rule applies to any piece of personal property used in an exchange.
Currently, there is a very high level of demand for collectible items, especially classic cars, which have appreciated greatly in value. You may be thinking that this is the right time to sell, and to cash out on the good investment decisions of yesteryear.
You'd be right, but you'd do well to consider the possibility of a 1031 exchange. A 28% capital gains tax represents a large portion of your profits, and if you're like me, you'll take the option that allows you to reinvest that money, maximizing your potential profits.
U.S. investors can save their money by utilizing 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!
While an exchange involving personal property is conducted in much the same way as a real estate exchange, it is important to note that in a personal property exchange, one has less leeway in terms of what will fulfill like-kind requirements. If you are exchanging a car, you will only be able to exchange it for another car of equal or greater value. The same rule applies to any piece of personal property used in an exchange.
Currently, there is a very high level of demand for collectible items, especially classic cars, which have appreciated greatly in value. You may be thinking that this is the right time to sell, and to cash out on the good investment decisions of yesteryear.
You'd be right, but you'd do well to consider the possibility of a 1031 exchange. A 28% capital gains tax represents a large portion of your profits, and if you're like me, you'll take the option that allows you to reinvest that money, maximizing your potential profits.
U.S. investors can save their money by utilizing 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!
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