Taxes and 1031 Tax Exchanges

Taxes are always a concern when dealing with real estate. So what can you do that the big investors do? A 1031 commercial tax exchange can save you a bundle on taxes. If you can arrange for the sale of a commercial property as an exchange instead and then take the money from the sale and invest it in more commercial investment property then you will not have to pay any income taxes on it.

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Who Should Take Advantage of 1031 Commercial Tax Exchanges?

Anyone that is selling a commercial property should consider taking advantage of this tax code to avoid income tax. However, be aware that dealers do not qualify. The IRS says that if a property is held “primarily for resale” then they cannot exchange it and take advantage of the break.

How is a 1031 exchange done?

Simply, to qualify for a 1031 break, the property you replace the old one with must be of equal or great value than the debt on the property you are selling. Essentially you cannot exchange a property for one that is worth less and expect to get a break. Consult an attorney if you are unclear to make sure you are in line with the IRS.

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Where do you find opportunities for 1031 exchange?

You can find properties eligible for a 1031 exchange on a number of real estate database sites. One such site is the Commercial Dex site where commercial properties of all sorts can be found. If you are in the market for an exchange to help with your taxes, then consider a stop at commercial Dex.

One of the greatest real estate tax breaks available to those with commercial property is the 1031 exchange. Remember that you must gain a greater or equal valued property, but that with this code you can save yourself a bundle while continuing to profit from commercial property.