This week at our office meeting I attended an excellent seminar given by LandAmerica about 1031 exchanges. David Gorenberg of LandAmerica 1031 is a Certified Exchange Specialist® and has the experience to not only handle the exchange smoothly but explain it succinctly and humorously as well. He managed in a short time to explain for us what should have taken much longer. He also has allowed me to share these highlights from LandAmerica's brochure on the subject.
A 1031 exchange is a powerful tax tool with the potential for substantial tax savings in every transaction. Tax-deferred exchanges have become a necessary procedure for owners of businesses and investment property of all sizes.
Eligible properties include commercial and residential real estate, qualified leaseholds, home offices, bussines vehicles, aircraft, boats, trucks, tractors, trailers, buses, factory equipment, FCC licenses, livestock and more.
Section 1031 of the Internal Revenue Code allows up to 100% deferral of the realized gain. This includes the capital gain plus the accumulated depreciation recapture. For investors large and small, there is n o other provision of the tax code that offers this magnitude of tax deferral. Please note this applies to Federal tax, and State taxes may be payable, but these are usually much lower depending on your state.
Reasons to exchange:
- Change the type of property you own
- Accommodate life transitions
- Change tenants
- Transition from maintenance intensive property to professionally managed property
Who can Exchange?
- Limited Liability Companies
- Foreigners who own U.S. property
If you are a business or investment property owner interested in deferring capital gains taxes, you should consider a 1031 Exchange.
How does it work?
At LandAmerica 1031 they've made it easy for you. Just follow these steps:
Step 1 The Contract
You sign the contract to sell your exisiting business or investment property relinquished property).
Step 2 The Contact
When closing is scheduled on the relinquished property, but before the property is transferred, you contact LandAmerica 1031 to set up and execute the 1031 Exchange.
Step 3 The Closing
At transfer of the relinquished property, the net sale proceeds are delivered to LandAmerica 1031, which assumes complete control of the net proceeds.
Step 4 The Identification
You use the forms provided by LandAmerica 1031 to notify them in writing of the identified replacement property(ies) within 45 days of the transfer of the relinquished property.
Step 5 The Acquisition
You close on the acquisition of the replacement property(ies) within 180 days from the transfer of the relinquished property, or the due date of your federal income tax return, including extensions, for the year in which the relinquished property is transferred.
Every transaction is unique and will raise its own challenges, so you need to use an expert. For more information visit LandAmerica 1031 or contact me and I will help you connect with David Gorenberg of LandAmerica.
If a 1031 Exchange is of interest to you or you would like more information please email me your information as we will be planning a seminar on this in Devon, PA in the near future and we can add you to the mailing list.
If you are buying or selling on or around Tredyffrin Easttown or along the Main Line we can help you, contact us or connect
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