 Due to the
broad definition of “like-kind” for real property exchanges, these
types of exchanges are generally one of the most common. In general,
any type of U.S. real property interest held by the client for
productive use in a trade or business, or for investment purposes can
be exchanged for another real property interest regardless of its
grade or quality and as long as the property to be exchanged is
considered real property under the state law in which the property is
located. For most real property exchanges the taxable gain is due to a
combination of the appreciation in value and the amount of
depreciation taken over the period of time that it was owned by the
client. The following are examples of the wide variety of real
property interests that are deemed to be of “like-kind” and that can
be exchanged: vacant land, agricultural land, office buildings,
industrial parks, apartment buildings, single family rentals, 30 year
ground leases, retail malls, undivided fractional interests, mineral
rights, oil fields, air rights and development rights.
Permission from Fidelity National Title and Escrow with IPX1031.
1031 Exchange in Paradise
Do you currently own an investment property such as an apartment
building, commercial building, vacant land, rental property, or any
other property that may qualify for a 1031 tax deferred exchange?
If so, you may want to seriously consider trading your existing
investment property for a piece of paradise.
By using a 1031 Exchange, one can a convert the equity in a piece of
raw land, commercial or apartment building, and / or an investment
property into a spectacular Hawaii home or condo and defer the tax on
your capital gain. For detailed information and the IRS rules on how a
1031 may work for you, I invite you to
email or call me at
(808)-870.2227 or toll free at (866)621.6384 and we can discuss what
makes sense for you and have a detailed report on 1031 exchanges
delivered directly to you.
I have been working with attorneys, clients, accommodators, CPA’s for
years to develop an excellent strategy to help investors improve their
purchasing power in Hawaii.
1031 Maui Real Estate purchase
Over the past 6 years, we have helped
many of our clients in 1031 tax-deferred exchanges. If you are
interested in a 1031 exchange or a 1031 "reverse" exchange, we will be
happy to have a 1031 transaction coordinator discuss the legalities of
this type of transaction with you. We will simply email you all the
information that you will need regarding selling a property to
purchase another property here on Maui or another island. You will
need to close the transaction within 180 days. We will be happy to
walk you through this exchange at no extra cost or liability to you.
Please Email us with any
questions you may have and we will get a package sent to you
immediately. You may also call me direct at 808-870-2227 or my toll
free at 866.621.6384 x101.
We look forward to helping you in the near future.
1031 Exchange
A few common questions regarding IRS 1031 Tax Deferred Exchanges and
their Benefits for You:
- What is a tax-deferred exchange?
A tax deferred exchange is the transfer of investment property in
exchange for replacement investment property rather than for cash.
- Why do a tax-deferred exchange?
The exchange allows the tax liability on the profit generated by the
sale of investment property to be deferred until the replacement
property is sold.
- How do I know if an exchange will be beneficial for me?
This will depend on the amount of profit generated by the sale of
your investment property and your overall tax situation. Consult
with a CPA and/or tax attorney.
- Can I exchange my residence?
No. To qualify under Section 1031 of the IRS Code, property
exchanged must be held for investment or business.
- Do I need any special agreements of exchange?
Yes. You should consult an attorney to draft the appropriate
exchange agreement.
- Can I exchange more than one property and acquire more than one
replacement property?
Yes.
- Are there any additional closing costs or fees if I do an
exchange?
Yes. They typically include the following:
1. Attorney's fees for structuring the exchange and drafting
exchange documents.
2. Exchange fees for the accommodator.
3. Duplicate closing costs for exchange portion and replacement
portion.
- Are there any special requirements to qualify for the benefits
of a 1031 exchange?
Yes. Consult a CPA and/or tax attorney to determine whether you
qualify.
- Do I need to have the replacement property identified when I
transfer ownership of my property?
No. Assuming you have the appropriate exchange documents in place,
you have a 45 day period in which to designate your replacement
property once your property has been transferred.
- What happens if I cannot identify a replacement property within
45 days?
The benefits of a 1031 exchange will not be available to you and the
transaction will be treated as a "sale" for tax purposes.
- When I find a replacement property, who signs the contract?
Your accommodator normally signs the contract to purchase the
replacement property under the terms and conditions that are
acceptable to you.
- How long do I have to close escrow on the replacement
properties?
You have 180 days from the date of the transfer of your property to
close escrow on all of the replacement properties.
- What is the function of an
intermediary/accommodator/facilitator?
An accommodator acts to facilitate the exchange for many reasons.
The following are a few reasons:
1. Unless the purchaser of your property agrees to exchange a
property he now owns or agrees to purchase one, you may not be able
to effect an exchange.
2. A delayed exchange without an accommodator could create special
problems because of "buyers remorse" and/or "lurking" creditors of
buyer attaching funds held.
- Can a foreign individual do a tax-deferred exchange?
A foreign individual can do a tax-deferred exchange, but there are
special requirements that must be met in order to avoid the 10%
withholding of tax under FIRPTA. Consult a CPA and/or attorney who
is familiar with FIRPTA and IRC 1031.
- Do you report to the IRS on 1099 forms the interest earned or
growth factors accrued by the taxpayer pursuant to the exchange
agreement?
Yes.
This information, though believed to be accurate,
should not be relied upon without verification by consulting a tax
professional.
Click here
to request 1031 Exchange Information |
