Will a 1031 Exchange Benefit You?
When considering real estate options, there are several tax benefits that you may be eligible to take advantage of, including a 1031 exchange. Through a 1031 exchange, real estate owners can defer capital gain taxes when they sell a business or investment property and use the proceeds of the sale to purchase another property ‘similar’ to the first. Business owners and taxpayers who want to accomplish a wide range of business and/or investment objectives can reap many benefits by taking advantage of a 1031 exchange, take a look. Preservation of Equity A properly structured 1031 exchange provides taxpayers the opportunity to defer 100% of both federal and/or state capital gain taxes, as well as depreciation recapture taxes. This essentially equals an interest-free, no-term loan on taxes due until the property is ultimately sold for cash. Leverage Many taxpayers exchange from a property where they have a high-equity position or one that is “free and clear” into a larger an