1031 exchanges are complicated. We run into a lot of taxpayers who are intrigued by them but have a lot of questions they want answered before they begin. That’s why we’ve compiled the following list of the most frequently asked questions that we hear about 1031 exchanges. Don’t hesitate to reach out to our 1031 exchange professionals if you have any more questions – 612.643.1031.
Why Should I Consider Doing a 1031 Exchange?
1031 exchanges are a great way to save money on taxes and keep your money working for you in a continued investment. If you have real estate or personal property that you use primarily for use in your trade or business, a 1031 exchange allows you to defer the taxable gains on that sale and move them into a bigger, better replacement property. In short, a 1031 exchange is a great way to keep your money working for you and compounding interest over time.
Can I Do a 1031 Exchange on Any Property?
The short answer is no. Not all property can be exchanged in a 1031 transaction. The biggest rule is that the property has to have been held for use in your business or trade before you exchange it. That means your own personal car, or the house that you live in with your family do not qualify for 1031.
How Do I Make Sure My 1031 Exchange is Successful?
There are a lot of rules and regulations surrounding 1031 exchanges, and many a taxpayer has seen their exchange fail because they didn’t do their due diligence. The best way to ensure that your exchange goes off without any problems is to hire a qualified intermediary before you start the exchange process. A 1031 intermediary facilitates exchanges on a daily basis. They are experienced with the rules, regulations, as well as the potential pitfalls of an exchange. Your qualified intermediary will prepare all the necessary documents for your exchange, and ensure that you hit all the deadlines for a successful exchange.
For answers to more frequently asked questions about 1031 exchanges, check out our educational videos.