You need all the help you can get to complete the highly complex process of a 1031 property exchange. Luckily, hiring a qualified intermediary ensures that you get the entire thing done quickly.
It may seem surprising, but the government has your best interest at heart when you’re investing in the real estate sector. Recognizing that the industry is cash intensive, the Internal Revenue Service created the section 1031 of the tax code. Under this section, an investor in commercial real estate properties can defer capital gains taxes after selling a property.
However, there’s a catch: you must reinvest the entire sales proceeds into buying another commercial property. If you’re eager to harness these benefits and grow your holdings in the sector, you can start by finding a 1031 qualified intermediary like 1031 Exchange Place.
Understand the Requirements
As with any other process in the sector, carrying out a 1031 property exchange is a complicated and tedious process. It involves plenty of paperwork and follows a closely monitored set of rules. One slight misstep can put a damper on the entire process, leaving you to nurse a hefty tax bill.
Rather than trying to wing it, you’ll get better results if you have qualified expert by your side. A successful property exchange is a two-step process. You will have to sell your current property holding and then make an offer on a like-kind property. You need all the help you can get to navigate these two highly complex processes.
Make the Tight Deadlines
The IRS has you on an incredibly short leash when undertaking a property exchange. You have precisely 180 calendar days to complete the transaction. Once you apply to take part in a trade, you have 45 calendar days to identify and present a replacement property.
You can have as many as three replacement properties as long as their total value is less than twice the current one. You then have the remaining 135 days to close the sale on the replacement property. Working with a credible expert, you can save time even when dealing with three different property owners.
Time is of the essence when looking to harness the benefits of a 1031 property exchange. Retaining the services of a credible intermediary ensures that you breeze through the complicated process.