1031 Exchanges

Did you know there is a perfectly legal way to avoid paying Capital Gains tax on investment property?

Internal Revenue Code 1031 states: "No gain or loss shall be recognized if property held for productive use in a trade or business or for investment is exchanged solely for property of like-kind."

I recently attended a class on 1031 Exchanges and learned volumes about the process of exchanging one investment property for another. The "take away" is simple: investors avoid paying profits to the IRS and instead, use them to leverage another investment property. On a $200,000 sale, that can mean a $70,000 difference in capital to invest on the next property!

In a nutshell, prior to selling an investment property, the owner needs to choose a third party "Qualified Intermediary" who walks them through the process of abiding by the Internal Revenue Code. Then, once the property has been sold, the investor has 6 months to close on another investment property that has been identified previously.

For more information check out this web-site: www.1031exchangeeducation.com