![]() Yes, there are four types of 1031 exchanges. ARE THERE DIFFERENT TYPES OF 1031 EXCHANGES? This allows you to defer your capital gains taxes. During a 1031 exchange, you are not receiving income directly – your qualified intermediary holds your funds and uses them to buy the new property for you. By doing so, you avoid “constructive receipt,” which is an accounting term that requires the seller to pay taxes on income to the IRS. Once you find a new property, the qualified intermediary takes the funds from your profit and uses them to purchase the new real estate you’ve chosen. The new property needs to be “like-kind,” which means it must have the same or greater market value as your original property. Traditionally, you would sell your property to the buyer and pay capital gains tax on the profit.ĭuring a 1031 exchange, you transfer the profit of your property sale to a qualified intermediary, who holds the funds for you while you find a replacement property. The 1031 exchange is designed to defer paying capital gains taxes on the sale of your property. Investments are limited to real estate of the same or greater valueĪ 1031 exchange, also referred to as a Starker exchange or like-kind exchange, is an exchange of ownership from one real estate asset to another real estate asset of the same value or greater. Real estate / property owners are eligible Owner swaps their property for another property of the same value or greater ![]()
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