A 1031 Exchange, named after IRS Code 1031, is a means of deferring some or all capital gains tax on the sale of a business or investment property by putting the proceeds of the sale in escrow with a Qualified Intermediary until the purchase of a property that serves a similar purpose.
A 1031 Exchange has very specific criteria that need to be met. That’s why you need a Qualified Intermediary for 1031 Exchanges with experience in the area to ensure you get the most out of your investment.
Rhodes Law Firm is equipped to act as a Qualified Intermediary for 1031 Exchanges and we can assist you in making sure the process is completed correctly.
Investors benefit from many advantages by taking advantage of the 1031 tax-deferred exchange:
- More Value
- Investors save more money in a 1031 Exchange because they do not have to pay capital gains tax on the proceeds of the sale to the IRS. Investors are then able to use those proceeds to boost their buying power in the purchase of one or more other similar properties.
- Consolidation & Diversification
- A 1031 Exchange has the ability to afford you greater flexibility in the number of properties you acquire. You can consolidate many properties into one or exchange one larger property into two or three smaller properties.
- Increase Cash Flow
- A 1031 Exchange allows you to exchange a piece of land that has not generated cash flow for a better performing asset without being penalized by the tax consequences.
If you would like guidance on a 1031 Exchange or have any questions about the subject, do not hesitate to contact us today.