Article Resources

A key topic that should be very important to real estate investing professionals is that of 1031 tax exchanges. If you are really serious about investing in real estate it will benefit you to study and learn the 1031 exchange rules in depth. This way you will be investing with the know how to get the best tax deferrals.

The most important thing to know about 1031 tax exchange rules are the deadlines. You must purchase a replacement property within one hundred and eighty days after the sale has been registered or before the next filing deadline. But there is also a forty five day identification period in which time you must use one of three methods to identify properties that you are considering for exchange.

In order to increase your tax deferrals, all money from the sale of your property ought to be reinvested directly into a new property. The 1031 tax exchange rules explicitly explain that one cannot apply proceeds from this sale to pay off expenses that are not involved in the exchange. In order to obtain the maximum tax benefit out of these expenses, one should manage them separately in the settlement and include a footnote, then write a separate check to your buyer.

If you are a non-resident owner, in other words you live outside the state where the property is located, you may face a required withholding of a percentage of the sale price. This is to satisfy that state's tax revenue requirement. Many states have found it difficult to locate out of state owners so they require this fee up front.

The real property tax act of 1980 as it pertains to foreigners requires that at least ten percent of the sales price must be withheld for this purpose. This withholding requirement can be waived depending on the state, so it's important to check your state's individual rules.

You must use a qualified intermediary who completes all the necessary paperwork and filing and must adhere to the 1031 tax exchange rules. There are many places on the internet where you can find 1031 exchange information and you can even find qualified intermediaries in your state.

Go to http://www.investing-secrets.com/1031-exchange/recommends/article-1031 to get hold of a copy of this article for your own site.

If you're a real estate investor, you simply have to study your 1031 exchange rules. It could save you literally thousands of dollars in taxes, and could help you avoid many of the pitfalls associated with 1031 exchanges. By doing a little research you can maximize your tax deferrals. You must purchase your replacement property only 180 days after the transaction, and all of the money from the sale of your old property must be reinvested in the new property. Go online to find the most current 1031 tax exchange information and find a qualified intermediary to help you with the paperwork.