A number of people love the idea of having an investment property but if time comes wherein you want to invest in another property by selling you’re the latter then you must consider 1031 exchanges. What you need to know about starker exchange or 1031 exchanges is that it is a part of the IRS code wherein one is allowed to sell their investment property to invest in another property using the gained profit. The entire amount of your sale must be re-invested into other property/proprieties. It doesn’t matter if you invest the amount in several properties so long as the full amount gained is re-invested in other properties. Before the sale can be completed, there will be a company that will act as the one that will keep all the funds until a “like-property” is found.
The moment you sell your investment property you are entitled to name those properties or the property you intend to buy using the proceeds, usually the time frame intended for this endeavor is 45 days. There are certain things included in this process so as no one will take advantage of the entire situation. The 95% Exception rule is included in these safety measures or approach. In this ruling, you must get the 95% of the entire property that you initially want to purchase. The closing date of the identified properties is done once you have closed the investment property you intend to sell; the time frame is usually 6 months.
You can almost use any type of property for 1031 exchange except those properties that serve as the primary residential home of the subscriber. The use of 1031 exchange is a good kick off for those who are first-timers in the investment market. It is also vital on your part to check on the IRS web page if you want to know more about 1031 exchange rules as well as the 1031 investment properties. This is also a good way to be acquainted with the best companies that can act as the third party of your 1031 exchange endeavor.
There are several advantage in using 1031 exchange unfortunately not all people are aware of this matter. Hopefully, this article was able to give an overview of the benefits one can get from 1031 exchange properties and how they work.
Most real investors make use of their money in other things or they usually keep it for future usage. If you are to compare 1031 exchange and the usual buy and sell procedures of real estate properties, its primary advantage is its non-taxable aspect. If you are able to sell properties and acquire one without the IRS bothering you then that would be very advantageous, don’t you think?