1031 Exchange year-end tax tip

Did you know that if you sell hour home at the end of 2007 and you open a 1031 exchange before the New Year you get to defer any capital gain taxes due until 2009? 

At its core, a 1031 exchange is designed to accomplish one simple goal: to defer capital gains taxes on property being exchanged for an equal or higher value property. But homeowners turn to 1031 exchanges to carry out a variety of business strategies. A home seller might use an exchange to defer paying taxes on gains until the following year, even if they don’t end up exchanging property. 

For instance, if you sell your property in December 2007 and initiate an exchange before the New Year, then you cancel the exchange in 2008 (within the time allotted by law) your taxes on your home gains are not due until April 2009.

They say that nothing is certain except death and taxes… but it is also true that a tax dollar paid later can be put to good use in the interim. It’s your money, why not keep it as long as you can?

Because of the complexity of 1031 exchanges, it is important to have a professional familiar with real estate financial strategies by your side. But depending on your situation, the complexities may just be worth the tax savings you could receive.

A legal and ethical way to put off paying Uncle Sam for as long as possible. For more information on 1031 exchanges call us today at 949-903-9922.