A 1031 exchange keeps earnings from an investment property, letting you reinvest in similar real estate to grow your portfolio.
Non-compliance with IRS rules can disqualify it, leading to hefty taxes.
One needs a lawyer for a 1031 exchange to ensure success.
What Is a 1031 Exchange?
A 1031 exchange, or like-kind exchange, lets real estate investors delay capital gains taxes when selling property.
Proceeds must be reinvested in similar property of equal or greater value.
To qualify, the property must be used for investment, business, or trade, per IRC section 1031.
The goal is tax-deferred wealth growth, with no limit on the number of exchanges.
You pay one capital gains tax when you make a final sale, rather than on each property sale during your lifetime.
When to Consider a 1031 Exchange
A 1031 exchange may be suitable for you if you’re:
- About to sell an investment property.
- Willing to reinvest the sale proceeds in similar property.
- Interested in a long-term, advanced wealth management strategy.
If these criteria match your situation, consider using a 1031 exchange to grow your asset portfolio.
Do I Need a Lawyer for a 1031 Exchange?
Responsible investors must adhere to IRS rules for 1031 exchanges to avoid tax penalties.
A tax attorney specializing in like-kind exchanges can help ensure compliance and prevent unexpected tax burdens, especially in complex scenarios.
While not mandatory, using a tax lawyer is advisable for a smoother 1031 exchange process.
Explore Your Options for Wealth Management
A 1031 exchange is a crucial part of your wealth strategy, designed to preserve your investment property earnings.
When selling such property, consult a tax professional about the tax advantages of using a 1031 exchange.
Successful investors often choose an experienced tax lawyers for 1031 exchanges.
1031 exchanges are a small part of legal needs, and most attorneys don’t specialize in them, risking exchange success due to unfamiliarity with the complex tax code and evolving requirements.