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1031 Exchange Basics

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1031 Exchange Basics

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1031 Exchange Basics
 

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1031 Exchange BasicsOnline version

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by HEATHER
1

A exchange allows investors to defer capital gains taxes when exchanging qualifying investment properties .

2

A property owner has days to identify replacement property after selling the original property .

3

The replacement property must generally be purchased within days of the original property sale .

4

A third party who holds exchange funds during a 1031 exchange is called a qualified .

5

Property received during a 1031 exchange that is not like - kind property is called .

6

A vacation home used primarily for personal enjoyment usually does NOT qualify as a property for a 1031 exchange .

7

Commercial buildings , rental properties , and unimproved land may qualify as property for exchange purposes .

8

Receiving cash during a 1031 exchange may create a taxable gain .

9

A reverse exchange occurs when the replacement property is purchased the original property is sold .

10

A 1031 exchange is commonly used to help investors defer gains taxes .

11

Leaseholds generally must exceed years to qualify for a 1031 exchange .

12

A taxpayer who misses the 45 - day identification deadline may lose the tax - benefits of the exchange .

13

properties exchanged under Section 1031 must generally be held for productive use in a trade , business , or for investment .

14

Personal residences typically do NOT qualify for a exchange .

15

The purpose of a 1031 exchange is to allow investors to defer taxes while continuing to wealth through investment property ownership .

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