Owning investment properties is a great way to add to your income. However, real estate can be complicated, so if you want to get the most out of investing in property, you need to know the ins and outs of real estate. While you might already know a lot about owning investment property, a Tennessee real estate attorney can help ensure you’re always making the right choices. At Tressler & Associates, we can help with various aspects of owning investment properties, including 1031 exchanges.
A 1031 exchange is often complicated, but especially so for property owners who are new to this. Even if you’re an experienced investor, it’s always important to ensure you have the right team on your side when going through complex processes like 1031 exchanges.
Section 1031 of the U.S. Internal Revenue Code allows property owners to exchange their current property used for business or investment purposes for a similar property. A 1031 exchange is also sometimes known as a “like-kind exchange.” When you go through a 1031 exchange, you defer the capital gains tax that you would be required to pay during a regular sale. When you eventually sell the property, you’ll have to pay these taxes, but you can use a 1031 exchange to put this off for years while growing your wealth.
Before qualifying for a 1031 exchange, it’s important that you understand what a “like-kind” property is. Properties don’t have to be exactly the same to qualify for a 1031 exchange. Because of this, you can exchange your property for one that differs in grade and quality. For example, if you currently own a vacant plot of land, you may be able to exchange it for an apartment building. These are very different properties, but can still possibly qualify for a 1031 exchange. Additionally, 1031 exchanges typically don’t apply to property that you have for personnel use, like your home.
A 1031 exchange can be extremely beneficial in the right situation. If you’ve never gone through a like-kind exchange, you might be wondering under what circumstances you should consider one. You might be ready to sell your current investment property, but you may want to hold off on that until you learn more about the benefit of a 1031 exchange. Here are some of the best reasons to go through with a 1031 exchange.
A 1031 exchange has strict criteria that need to be met in order to go through successfully. Because of this, you want to ensure you’re being careful and adhering to the guidelines. At Tressler & Associates, our real estate attorneys have the experience needed to help you through the 1031 exchange process. With our assistance, you can ensure that a 1031 exchange is the right choice for you and that you’re taking all the necessary steps to exchange properties without complications.
If you invest in real estate properties and are looking for something new, we can help. Contact our Nashville real estate law firm today for help with 1031 exchanges and other real estate matters.
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