The Tax Deferred 1031 Exchange is an elusive beauty: complicated yet enticing, rich in rewards yet potentially full of headaches, a long-term strategy with a seriously short time-limit, a great way to save on taxes but only if you follow the rules to the letter. Defined, a 1031 Exchange, IRS Code Section 1031 (AKA “like-kind exchange” or “a Starker”), is a swap of similar (as defined by the IRS) businesses or investment assets with either no tax due or limited tax due at the time of exchange. Translation: As the IRS sees it, if you follow the rules and regulations you can swap your mobile home park for another without cashing out or recognizing a capital gain, which should allow your investment to grow uninterruped tax deferred. Therefore, you can roll over the gain from one mobile home park to another, and another, and another as there is no limit to how many times you do a 1031 Exchange. Also, you can exchange your property for a higher-valued property (up to 200%) by using the value of your property as a down payment towards a new property!
If you know why you are doing it (goals and vision), and you’ve formed a good team (accountant, attorney, and broker), then breezing through a 1031 Exchange and profiting from it as part of your growth strategy will be as easy as keeping your eye on the prize. This exclusive year-long due-diligence primer guide has been formulated to help you close on a 1031 Exchange within the 180 day time limit by December 2014 once you identify a qualifying property. But, it’s not for everyone and you certainly shouldn’t attempt to do it alone. There are a few good reasons to do a 1031 Exchange but perhaps one of the best reasons is to find a property that is considered like-kind now but you can make more profitable after the exchange and enhance your portfolio.
This quarter we will touch on 10 critical rules you need to know about Internal Revenue Code Section 1031 and provide a playbook for first quarter due-diligence. Every quarter we will be building your knowledge base about the 1031 Exchange and giving you our 2014 Exclusive Guide to Your Next 1031 Exchange, but by no means is this an exhaustive source of information. You must do your homework and get with your accountant, attorney, and broker to reap the richest rewards. But, the clock starts ticking right now.
(For the full 1031 Exchange guide, please see our Special Reports section on our website at www.mcanuffgroup.com or contact Stephanie at email@example.com for a copy of the original publication.)