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Experienced Babon Group Associates
can assist you with 1031 exchanges by acting as a Qualified Agent. Babon Group
Associates have relationships with the nation's premier title agencies to ensure
you receive the quality service you deserve.
For more information about 1031
exchanges, please contact a Babon Group Associate.
What is a 1031 exchange?
1031 exchanges refer to section
1031 of the federal Internal Revenue Code (the tax code) which states that a properly
structured exchange allows an investor to sell a property, to reinvest the proceeds
in a new property and to defer all capital gain taxes.
Section 1031 states:
No gain or loss shall be recognized
on the exchange of property held for productive use in a trade or business or
for investment, if such property is exchanged solely for property of like-kind
which is to be held either for productive use in a trade or business or for investment.
A 1031 exchange defers tax payments,
it does not eliminate them.
Who should consider a 1031 exchange?
If you own an investment property
that upon a sale will net you a gain, either because it has been depreciated for
tax purposes and/or has appreciated in value, then you are exactly the person
who should consider a 1031 exchange. Such exchanges apply to property used in
a taxpayer's trade or business, to property held for investment and potentially
to property used as a vacation home.
Why should you consider a 1031 exchange?
Probably the most attractive reason
for considering a 1031 exchange is to defer paying capital gains taxes. As stated
earlier, a 1031 exchange does not eliminate taxes. By deferring taxes, the government
becomes an investment partner -- you have use of the government's money, your
deferred taxes, to pursue personal income or investment goals.
1031 exchanges also provide you
with leverage, allowing you to purchase property worth more. There are a few other
benefits 1031 exchanges offer, which include:
• Upgrade or consolidate
property
• Diversify
• Relocation
• Differences in regional
growth or income potential
• Change property types
For
more information about a specific exchange, please contact a Babon Group Realtor.
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