Today we are talking about 1031 Exchanges and the benefits they can provide rental property owners. A properly structured 1031 Exchange allows an investor to sell a property and re-invest the sale proceeds into a “like kind” property. This tax maneuver permits the investor the opportunity to defer the capital gains taxes they would have had to pay without the Exchange.
In order to participate in a 1031 Exchange, the Investor needs to retain the services of a Qualified Intermediary. If you are interested, Florida Property Managers can refer you to a Qualified Intermediary who specializes in this type of transaction. A successful property exchange includes very specific rules that need to be followed in order for you to obtain these tax savings.
To realize the full potential of a 1031 Exchange, there are time constraints. The Investor must identify, contract, and close the real estate sale(s) within a defined time period otherwise the tax benefits are lost.
Per the tax code, it is important that the Qualified Intermediary is not your tax preparer or any other professional you have had dealings with in the last two years. This includes your accountant, attorney and real estate agent. The Qualified Intermediary you choose should be bonded and insured against errors and omissions for anyone involved.
There are also special considerations for our foreign investors, which we’d be happy to tell you about. If you’d like more information on the 1031 Exchange, please contact us at Florida Property Managers.