Do you own a property you don't like?

With housing inventory being so low and mortgage rates cutting into profits, we’re finding a lot of investors are taking this opportunity to divest their portfolio of “problem” properties.? it’s important to know how to use a 1031 Exchange to defer the capital gains taxes.? Here are the highlights:

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• The Like-Kind Property Requirement generally mans that any type of real property that is used for business or investment purposes can be exchanged.
• Equal or Greater Value:? The replacement property’s value must be equal or greater than the net proceeds of the sold property to remain tax deferred.? Any shortfall or cash taken out of the transaction would be taxed as a capital gain.
• 45-Day Identification Deadline:? You must identify a replacement property (or properties up to 200% of value) within 45 calendar days.
• 180-Day Exchange Period:? The purchase transaction must be concluded within 180 days of the closing date of the relinquished property.
• Same Taxpayer Rule:? The seller and buyer of the properties must be the same.? No one can be added or removed from title at exchange.? The Qualified Intermediary can be consulted for further guidance if changes need to be made.
• Qualified Intermediary:? Last, and of critical importance, is that no funds can pass through your hands or be under your direct control in either the sale or purchase.? A qualified intermediary must be used to facilitate the transaction.

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An Exchange provides a good opportunity to scale up or scale down your operations.? If you are on the retirement/legacy end of your investment journey, there are many more passive ways to maintain your real estate investments without increasing or continuing the same level of engagement.?

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You don't have to be stuck with properties that no longer serve you. Just do your due dilligence, and always consult a professional when making changes in your real estate portfolio.