1031 Exchanges – Ideal Move for Investors
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. Take note that everything that you gained from the sale must be invested into another property. The number of properties where you invested the entire amount of the sale will not matter; you just really need to invest everything that you gained from it. In this matter, there would be a middle man or a third party that will hold the entire funds until one is able to find a “like-property” where the funds will be released and entire exchange will be completed.
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. Now, to make sure that no one will take advantage of the situation certain precautionary measures are included. One the things included in this is the 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.
Almost all types of properties can qualify for a 1031 exchange except those used by people as their primary residential place. The use of 1031 exchange is a good kick off for those who are first-timers in the investment market. It is also vital on your part to check on the IRS web page if you want to know more about 1031 exchange rules as well as the 1031 investment properties. This is also a good way to be acquainted with the best companies that can act as the third party of your 1031 exchange endeavor.
It is vital to know how advantageous these 1031 exchanges are rather than settling with the buy and sell of properties. Those are just the common things that you need to be aware of when dealing with 1031 exchange properties.
Most real investors make use of their money in other things or they usually keep it for future usage. The primary advantage of a 1031 exchange is that it’s non-taxable in other words you don’t need to pay any taxes compared to the normal procedures done in selling and purchasing new properties. This is really something beneficial on your part since the IRS will not bother you as you go on with the selling procedures.