What to Know About 1031 Exchanges
A number of people love the idea of having an investment property but if time comes wherein you want to invest in another property by selling you’re the latter then you must consider 1031 exchanges. What you need to know about starker exchange or 1031 exchanges is that it is a part of the IRS code wherein one is allowed to sell their investment property to invest in another property using the gained profit. The entire amount of your sale must be re-invested into other property/proprieties. It doesn’t matter if you invest the amount in several properties so long as the full amount gained is re-invested in other properties. Before the sale can be completed, there will be a company that will act as the one that will keep all the funds until a “like-property” is found.
The time it takes for you to decide on which properties to purchase using the profit of the investment property you are selling is 45 days. There are of course certain things included in this process so as to make sure no one will take advantage of it. A good example of this is the so called 95% Exception rule. This is called 95% rule since the seller of the investment property must get 95% of what the property they intend to purchase. Another rule that you must keep in mind is that if the sale property closes, you are given 6 months from the date to close on those properties you intend to purchase.
You can almost use any type of property for 1031 exchange except those properties that serve as the primary residential home of the subscriber. The use of 1031 exchange is a good kick off for those who are first-timers in the investment market. If you want to be acquainted with the entire guidelines of these 1031 exchange and also with the 1031 investment properties the checking things out in IRS web page is necessary. There is also a list of intermediate companies that shall hold the funds of the investors along with accurate information about this exchange.
There are several advantage in using 1031 exchange unfortunately not all people are aware of this matter. The things mentioned earlier are just the basic things that you need to know about these exchanges.
Most real investors make use of their money in other things or they usually keep it for future usage. The primary difference of acquiring properties through 1031 exchange and the conventional ones is that you can acquire properties without worrying about the tax. If you are able to sell properties and acquire one without the IRS bothering you then that would be very advantageous, don’t you think?