🔄 1031 Exchanges, in Plain English

If you've owned investment property for a while, you've probably heard the phrase “1031 exchange.” In basic terms, Section 1031 can allow an investor to defer recognition of certain gain when qualifying investment or business real property is exchanged for qualifying like-kind real property.

🏘️ “Like-kind” doesn't necessarily mean one duplex must be exchanged for another duplex. IRS guidance explains that real properties can generally qualify as like-kind even when they differ in grade or quality. What matters is meeting the applicable real-property and investment/business-use rules. Real estate held primarily for sale doesn't qualify in the same way.

⏰ The important part is planning before selling. A 1031 exchange contains specific technical requirements and deadlines, so investors should involve an appropriate qualified intermediary along with tax and legal professionals early. This isn't something to decide after the original property has already closed.

💡 CORE can help analyze replacement-property opportunities, but whether a 1031 exchange is appropriate for your taxes belongs with a qualified tax professional. Knowing the option exists simply gives you time to ask the right questions before the transaction.

📩 Looking for your next investment property? To talk with one of our agents, visit us at mycoreteam.pro.