Key Points of a 1031 Exchange

  1. 15/25/6 - Is the focus of the tax benefits from a 1031 Exchange.   Use these deferred IRS funds and apply them to your new investment property:  
    15% Deferred tax on capital gains
    25%  Deferred tax  on depreciation
    6%      Deferred tax at the state level (Georgia)

    e.g.  On an originally purchased home at $75k now worth $150k where investor has  applied  depreciation over past tax years, the investor may have over $30,000 in deferred taxes that, instead of going immediately to the IRS, can be used to purchase other property(s).

  2. Owned for investment - Both properties (your sale and your exchange purchase) must be owned for investment (like kind) or all taxes  may be  due.

  3. 45/180 - Exchange  items must fall within the IRS defined time periods or all taxes are due.
    Day 0By Day 45By Day 180
    "Relinquish" ClosingIdentify  Acquisition  PropertiesClose on Acquisition(s)

  4. Equal or greater value - All  equity must be placed into exchange property of equal or greater value (taxes due on any equity not spent).

For more information please consult your tax professional.

  1. 1031 Exchange - Main Page
  2. Rate Your Investment Properties
  3. Key Points to a 1031 Exchange
  4. The Meaning of "Like Property"
  5. The Exchange

All information believed accurate but not warranted.




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