Internal Revenue Code (“IRC”) Section 1031 is a power tool that allows investors to reinvest their capital in the most advantageous like-kind investment while deferring the capital gains, depreciation recapture and state income tax consequences. The rationale behind Section 1031 is to not penalize exchangors when they are not cashing out, but are reinvesting all of their equity in like-kind property. This stimulates the economy and moves capital, increasing property values and encouraging more investments.
1031 exchanges are a fantastic way to keep your money working for you in continued investments, rather than taking a capital gains tax hit with the sale of real property.
Minnesota Qualified Intermediaries
If you’re considering a 1031 exchange of real estate, the best thing you can do is consult with a qualified intermediary. There are a lot of rules and regulations that come with a 1031 exchange, and you want to make sure you’re covering all of your bases. That’s where a qualified intermediary can help – by answering your questions, advising you throughout your exchange, and preparing the necessary documents for your closing. Contact the qualified intermediaries at Commercial Partners today to get started!