Advantages Of 1031 Exchanges For Tax Deferment In Boston MA

A 1031 exchange is a method for deferring taxes on the sale of one property by purchasing another. Real estate used for business or investment can qualify. When used properly, it may result in significant savings. This blog provides the advantages of 1031 exchanges for tax deferment in Boston MA.

Qualified Real Estate

You must possess a qualified property before considering a tax deferred 1031 exchange. Qualified properties are ones involved with a trade or for investment. It may include land, residential, rental, industrial, and commercial properties. You must also intend to purchase similar property that also meets the qualification standards.

Advantages Of 1031 Exchanges For Tax Deferment In Boston MA

Typically, when you sell an investment property, you pay capital gains taxes on the earnings from the sale. This is true despite what the money is used for afterwards. Taxes can be owed to the federal and state government. Depending on how many years you kept a investment and the amount of equity, the taxes owed may be quite large. A 1031 exchange gives you a means to put the earnings from one property directly into purchasing another like-kind property and defer capital gains taxes until you sell that new property. Actually, a 1031 exchange may be performed on that other property to postpone taxes again.

Considering a 1031 Exchange

There are several components to a 1031 exchange that you should be aware of BEFORE marketing aproperty. 1031 Exchanges are not something that you may complete after the fact. You must plan to complete an exchange when you list a qualified property for sale. Particular guidelines must be followed to execute the exchange. This includes deadlines for selecting and purchasing a replacement. A qualified intermediary must also be used to administer the funds. If a deadline is missed, all potential tax savings will be void. Consult with an experienced 1031 exchange consultant for additional guidance on 1031 exchanges and to reap the advantages of 1031 exchanges for tax deferment in Boston MA.

About Scott Beard

Finding the right Realtor can be the difference between a happy, stress-free home buying or selling experience, and an unhappy, stressful experience. That’s why choosing the right Agent to begin with is key. I have helped hundreds upon hundreds of clients during my career and sold over $55 million in properties and look forward to putting my experience to work for you.
Contact me at any time. I look forward to hearing from you.

Ask Scott...

* indicates required field