San Francisco Real Estate and Community

Provided By Tom Carlson

IRC 1031 Tax Deferred Exchanges

It is amazing how many sellers have told me to sell their rental and income properties  and have  NOT considered tax planning. When I ask about the tax consequences, they tell me they will worry about this after the property sells.

Some of these sellers have owned the property for years, with a VERY low tax basis, so the Capital Gain Tax is going to be substantial.

Fortunately, the IRS has created tax deferred exchanges to help investors keep more your hard earned dollars.  However,  if the trade is not structured correctly, the seller has no option other than to pay the IRS on the taxable gain.

Tax deferred exchanges allow sellers to defer the taxable gain from the sale of their properties subject  to IRS rules and regulations. The 1031 Exchange and Reverse Exchange serve to postpone all or part of the gain from the sale of qualified properties. The rules are fairly simple but VERY unforgiving if not followed exactly as allowed. Therefore, a qualified and experienced intermediary is a MUST if you are considering an exchange.   The Title companies and many independent qualified intermediaries offer their clients services and ADVICE for IRC 1031 Exchanges. Here are a few links to explore: Please call for specific details:

1031 Exchange Services

Asset Preservation Incorporated

First American Title and another good First American Title resource

Old Republic Title

Related posts:

1. New Rules on $250,000-$500,000 Capital Gain Exclusion on Sale of Principal Residence

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