When you own a home or business and you would like to sell your property and move into a larger home or buy investment property, there is a way you can save on taxes. That you should know.
Recently Jay Peet from Investment Property Exchange Services spoke to us about how a 1031 Exchange, works and how investors can save on transferring funds from one property to another.
What is a 1031 Exchange?
It's the exchange of property to a like kind property where any capital gains taxes would be deferred. There are rules and guidelines to follow depending on the type of property.
Jay spoke about the four aspects of a 1031 Exchange, the L.T.V.V. :
L - Like Kind: The sale of your property must be of like kind to the replacement property, meaning that they are both being held for investment purposes. You can't go from a sale of an investment property to a purchase of a primary residence.
T - Time Frame: When your escrow closes on the sale of your property the clock starts and the exchanger has 45 days to identify a replacement property and 180 days to close escrow on the identified property.
V - Vesting: Whoever is on title of the sold property will be on the title of the purchased property. The relinquished property must be the buyer on the replacement property.
V - Value: The exchanger must purchase the replacement property(s) using all the cash money from the sale of their relinquished property to defer 100% of the gain. If any of the cash is pulled out from the sale of the sold property that money would then be taxed. The purchase property must be equal to the net sales price of what they sold.
If you have any additional questions or would like help with a 1031 exchange, Contact Jay Peet 805-636-4944 firstname.lastname@example.org
If you would like to sell your San Luis Obispo investment property through a 1031 exchange, contact Traci for your buying and selling needs. I'd be happy to help.
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