1031 Las Vegas Tax Deferred Exchange Advantages
A 1031 tax deferred exchange may be the best tax advantage the real estate investor has ever been provided by the U.S. Government, and it is becoming a widely used avenue to defer federal taxes in the growing Las Vegas real estate market.
A 1031 Las Vegas tax deferred exchange allows real estate investors to sell an investment property and buy another property without paying any immediate capital gains taxes. This little clearly understood and often misunderstood IRS 1031 tax deferred Internal Revenue Service code is not for use on principal residences or second homes, but only on investment properties. The statue provides real estate investors a way to parlay their real estate asset profits into another property without any immediate tax consequences.
The 1031 tax deferred exchanges are also commonly called “the like kind exchange” by tax professionals and exchange company handlers, primarily because the property that sellers must re-purchase must be equal to or greater in value over the property they have sold.
Exchanges in Las Vegas real estate are sometimes cumbersome and may involve up to 3 properties. Only experienced real estate professionals, tax advisors well practiced in this specialized field and exchange company professionals who handle many of these transactions should be used to conduct exchanges. Tax accountants heavily experienced in this field will inform you that only about 25% of all attempted exchanges ever close escrow successfully. The majority or some 75% fail due to inexperience or the inability of the sellers to meet deadlines set for the exchange.
An exchangor or the seller of a property must submit a list to a qualified intermediary identifying the replacement property within 45 days of the closed sale of their investment property. Up to 3 properties may be named to acquire. The purchaser, who is then recognized legally as the exchangor must close the sale on the replacement property within 180 days following the sale of the reliniquished property or the due date of the seller’s tax return, which ever occurs first.
Handling 1031 tax deferred exchanges have become a speciality of Mike Colpitts. There are many intricacies involved. To defer taxes, the transactions must be structured to avoid receipt of any funds, including personal notes, cash and mortgage relief.
A qualified intermediary must be used to handle the funds, which cannot be touched by the principals at any time or they risk being taxed on the entire profit they have made from their real estate. To get more information on 1031 tax deferred exchanges just contact us.
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