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1031 commercial exchanges let investors defer capital gains taxes by swapping one business property for another.
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What Is a 1031 Exchange in Commercial Real Estate? A 1031 commercial exchangelets investors sell one commercial property and buy another without paying capital gains tax right away. It’s a way to defer taxes and keep more money working for you.
Who Can Use a 1031 Exchange? Only business owners and real estate investors can use a 1031 exchange - not personal homeowners. It’s for those trading one commercial or investment property for another of “like-kind.”
Eligible Commercial Properties for 1031 Exchanges You can use a 1031 commercial exchangewith office buildings, warehouses, shopping centers, and more. As long as the use stays business-focused, most commercial properties qualify.
What Are the Rules of 1031 Exchanges? There’s a 45-day window to identify new properties and 180 days to close. You must use a qualified intermediary. The new property’s value should match or exceed what you sold.
Can You Get Extra Time to Complete a 1031 Exchange? Extensions are rare. The IRS allows 180 days max from the sale date to complete the new purchase. Missing this timeline can lead to losing the tax deferral benefit entirely.
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