What is a 1031 Exchange?

Posted by on Nov 4, 2014 in Tax Tips | Comments Off on What is a 1031 Exchange?

What is a 1031 Exchange?

Owning and selling property can be complex. If you’ve been thinking about selling an income-producing property that has increased in value since you purchased it, you may want to consider the tax benefits of a 1031 exchange.

Call toll free (1-866-244-3517) and talk to Jeff Baker, CPA to find out if a 1031 exchange is right for you.

A 1031 exchange is a method where people can defer taxes and sometimes reduce or eliminate taxes by trading properties (instead of just an outright sale).

Who Can Benefit from a 1031 Exchange?

Typically the people who benefit from the 1031 exchange own property that has appreciated, but they don’t necessarily want or need the money that comes from the sale. In addition, they may be looking to reduce or avoid capital gains taxes that can be associated with the sale of an appreciated property.

How Does a 1031 Impact Gapital Gains Tax?

When you sell an asset for a profit, it can be subject to capital gains tax and alternative minimum tax. The benefit of a 1031 exchange is that to the extent that you transfer money into a new piece of property that will defer the gain, you only pay taxes to the extent that you keep cash back or receive other compensation (“non-like kind” property) that doesn’t qualify.

What Should I Do Next?

The experts at Baker Retirement and Wealth Management, P.C. have been serving the greater Evansville, Indiana area for thirty years. Specializing in helping farming families and other entities with 1031 exchanges, tax laws, and accounting services, the Baker team is ready to help you. You don’t have to manage your money alone. Call Baker Retirement and Wealth Management toll-free today at 1-866-244-3517.

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