Effective Tax Strategies For Real Estate

Effective Tax Strategies For Real Estate

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Investors in real estate create tax liabilities for themselves. These liabilities at times might be very huge and this makes the investor think extensively about selling the property that he or she has. There are tax free exchanges that came into the picture in 1920 and investors in the real estate market are aware of them however they just prolong holding onto properties they like for a long period or buying replacement properties they are not ready to purchase.

The Welfont Group in Tampa, Florida helps clients team up with the 1031 Exchange also known as the IRS Section 170 Bargain Sale. This has been a part of the Tax laws since 1917. It has been designed in such a manner to allow clients receive a better outcome from many sellers. If it is followed in a proper manner, the law will permit the client to divest himself or herself to a property held in a 1031 Exchange where you can cash your chips and pay little or a no capital gains tax that depends upon the transaction conducted.

Effective Tax Strategies For Real Estate

Things you should know about 1031 exchange

The professionals here state that there are certain things that you should know when it comes to the 1031 Exchange. This provision is solely for commercial properties and investment. This means you cannot swap your residential home for another home. However, you may use this provision for the swapping of vacation homes. For this purpose, it is prudent for you to consult experts. There is however some personal property that may qualify for this provision. For example, tenant in common interests in real estate can qualify but not corporate stock or partnership interests. The provision says that you can exchange “like-kind” properties however it has a liberal sense. You may exchange an apartment for land, a ranch for mall etc. You also have the liberty to exchange a business for the other.

The time taken for you to find the right exchange partner might be delayed. It is hard for you to find the person willingly to exchange the same kind of property to you exactly in the way you desire. Here, you would need the services of a middleman who holds the cash for you after you sell the property and deploys it to purchase the replacement property on your behalf. This is known as the three party exchange and it considered as a swap under the provision.

The experts make it simple for you…

Now, the 1031 Exchange does sound complicated and there are several things that you should understand when you have decided to go in for it. It is here that the professionals of Welfont Group will help you out. They will explain to you the technical terms in detail so that you effectively are able to understand how it works. This Group is famous in Tampa, Florida for their dedication to their clients and friendly attitude. This is why they are the first choice of commercial real estate investors in the USA today!