What is a 1031 exchange? 1031 Exchange is the postponement or deferment of paying taxes on your capital gains from the sale of your investment property. Be sure to talk to your qualified tax consultant about your capital gain taxes.
- 4 Types of 1031 Exchanges- Simultaneous exchange, Delayed exchange, Reverse Exchange, and Improvement exchange.
- Properties must be exchanged/swapped for like-kind -similar in kind. Investment property cannot be exchanged for a primary residence/second home or vacation home.
- Proceeds from sale MUST be held in escrow by a third party – if you receive funds before the 1031 exchange is complete, it could disqualify the 1031 exchange, and your capital gain taxes will be taxable.
- Timeline Rules – Be sure to meet your deadlines- Investors have 45 days to identify a property, if they do identify a property, they have 180 days to close and if they don't close in 180 days, then they lose out on the 1031 and are subject to the capital gain tax.
- When will Capital Gain Taxes be due when the investment exchange property is finally sold, it is subject to capital gain taxes.
For questions and additional information about the 1031 exchange please call us at 541-683-3300. Click on the links and it will direct you to the IRS websites below. Be sure to talk to your qualified tax consultant regarding any capital gain tax questions.
IRS 1031 Fact Sheet
IRS Form 8824 and Instructions
Stepping Stone Mortgage, Inc. is a qualified mortgage lender with all loan officers and processing staff trained to handle your questions. Our dedicated staff will help you through the loan process in a very efficient manner for you to purchase or refinance your home.