1031 Exchange: The Basics
Posted by Monte Davis on
One of the bits of lingo you'll see tossed around in real estate investing is "1031 exchange." This is one of those topics that is as complicated as you let it be. Smart investors -- which is what we all try to be -- have smart accountants. If you don't have one of those guys? Go find one. That said. Here are the basics.
A "1031 exchange" is a federal tax designation. (Yeah, I know makes my eyes roll back in my head, too.) Essentially it allows you, the investor, to sell Property A and buy Property B without losing money to a capital gains tax. Normally, you'd be looking at 15%Â Â loss on capital gains, so the exchange lets you hold on to more money to keep your investment (aka property) portfolio afloat.
The requirements to qualify for a 1031…
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