How Tartan can help you defer capital gains tax on the sale of real property through a 1031 exchange.
One of the most powerful tools available to real estate investors comes in the form of tax-deferment on proceeds from the sale of real property. Internal Revenue Code Section 1031 lays out the conditions in which an investor can defer capital gains tax on the sale of real property when the sale proceeds are invested in another property within a specified period of time. For those looking to trade out of a real estate asset that has been fully depreciated or has experienced significant appreciation, these “1031 exchanges” provide a financially advantageous way to avoid paying capital gains while growing one’s portfolio.
The challenge with these exchanges is that they require a certain expertise to navigate, and this is where TARTAN can provide value. To qualify for a 1031 exchange, certain requirements must be met and deadlines observed. Also, there are different kinds of exchanges to know: in a “direct swap,” for example, the owner does a simultaneous exchange for another piece of property. More common is a “deferred exchange” in which the owner sells property and then purchases one or several like-kind properties within the defined period. In a “reverse exchange,” the replacement property is purchased first and held in escrow until the original property is sold.
Knowing the market as well as we do, Tartan can work with each client to set a listing price and create a marketing strategy that will most likely result in a closing time and price range that meet your individual needs.
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