South Dakota Children’s Museum

South Dakota Children’s Museum South Dakota Children's Museum

South Dakota State University Football

South Dakota State University Football South Dakota State University Football

Downtown Brookings

Downtown Brookings Downtown Brookings

South Dakota State University Campanile Fall

South Dakota State University Campanile Fall South Dakota State University Campanile Fall

McCrory Gardens

McCrory Gardens McCrory Gardens

South Dakota Children’s Museum

South Dakota Children’s Museum South Dakota Children's Museum

South Dakota State University Basketball

South Dakota State University Basketball South Dakota State University Basketball

South Dakota State University Campanile Winter

South Dakota State University Campanile Winter South Dakota State University Campanile Winter

Brookings Aquatic Center

Brookings Aquatic Center Brookings Aquatic Center

Holiday Train Going Through Brookings

Holiday Train Going Through Brookings Holiday Train Going Through Brookings

McCrory Gardens Visitor Center

McCrory Gardens Visitor Center McCrory Gardens Visitor Center

Downtown Brookings

Downtown Brookings Downtown Brookings

Investors

Investors, Are You Using a 1031 Like-Kind Exchange?

Section 1031 of the Internal Revenue Code allows investment property owners to sell an investment property and defer tax payments by reinvesting the proceeds into a “like-kind” investment property (or properties).  There are many ins and outs to the rules that govern the use of a 1031 exchange, but all real estate investors should understand the basics.  As always, I would defer any tax-related questions to a qualified accountant, but I’m certainly here to help guide you through this process.

A 1031 exchange is a great way to defer capital gains AND depreciation recapture taxes that are owed to the IRS.

1.  Your new acquisition (property) must be of equal or greater value (or there will be current tax consequences).

2.  In order to defer currect taxes, you must invest all equity from your old investment property into the new property.

3.  You must use an intermediary to handle the 1031 exchange.  Any direct funds gained from the sale will be taxed otherwise.

4.  Prior to closing on your currrent property, you must prove your intentions for the 1031 exchange and then have 45 days to identify the new property.

5.  Then, you must close within 180 days of your original property close date.   In cases 4 and 5, there are absolutely no extentions.

6.  You may also be able to use a Reverse 1031 Exchange if you have found a new property, but have not sold your original yet.

7.  Though a residence cannot be used in a 1031 Exchange, you may be able to use your future investment after a certain time period as your personal residence.

8.  These are just some key points as of December, 2011…as always consult your accountant for more specifics.

9.  Lastly, I can help you find that like kind investment property.  Just give me a call.

10.  This is a nice resource of information online. Click here.

Copyright ©2012. Information is deemed reliable but not guaranteed.