Service Line - 1031 Exchange
Team Hager understands the importance of managing your 1031 exchange properly. We
have alighed ourselves with licensed 1031 experts who will guide you through your
exchange. Team Hager is committed to ensure the highest quality standards are used
with every trasnaction.
As an investor, you already realize how important it is to take advantage of the
1031 tax-defferred exchange. Team Hager is prepared to not only to sell your existing
investment property and provide a property for you to exchange into, but help you
get the critical guidence to complete the exchange. Please contact us today to discuss
your 1031 exchange needs.
1031 Exchange Basics:
A Section 1031 Exchange is a transaction that allows an owner(s) to sell investment
property(ies) and buy "like-kind" investment property while deferring payment of
the 15% (or greater) capital gains tax and 25% recapture of depreciation that would
ordinarily arise from the sale of appreciated real estate.
The basis of the relinquished (sold) property becomes in whole or in part the basis
of the replacement (purchased) property and the tax is deferred until such time
as the replacement property is sold. If the replacement property is then exchanged
later, the taxes continue to defer. All deferred taxes will continue to be carried
forward as long as your business, investment or rental properties are disposed of
in §1031 Exchanges.
To completely defer the tax, the owner must purchase replacement property(ies) of
equal or greater value to that which was sold. There is no limit to the number of
properties that can be sold or purchased during a single Exchange. An Exchanger
must have debt and equity in the replacement property equal to or greater than the
debt and equity that was on the relinquished property. The proceeds from the sale(s)
must be held by a Qualified Intermediary (All Properties Exchange Group, Inc.) between
the time of the sale and that of the purchase.
An Exchanger may "downsize", i.e. not invest an amount equal or greater to that
which was sold, but tax will be due. This situation would need to be discussed thoroughly
with your tax advisor. If this situation occurs, the exchanger is said to have received
"boot". In essence, any "boot" received will be considered taxable income. Boot
includes cash taken from the exchange, whether out of equity at the time of sale
or by excess borrowing on the purchase side, debt reduction, which occurs when a
taxpayer's debt on replacement property is less than the debt which was owed on
the relinquished property, or sale proceeds, which are non-transaction costs, including
rent prorations, tenant damage deposits, utility escrow charges or any other charges
unrelated to the closing.
There are time limitations associated with exchanges, which begin on the date of
the closing of the first property. The Exchanger has 45 days in which to identify
any potential replacement property(ies), and an additional 135 days in which to
close on those identified property(ies), for a total of 180 days.
Source: www.1031apeg.com
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