Knowing These Key Points Will Make 1031 Exchange Process Easier for You

Investors are always on the lookout for ways to avoid paying unnecessary taxes. If you have been looking for a completely legal and easy way of not paying capital gain tax and depreciation recapture tax, then you should consider going for 1031 exchange. You have to pay these taxes when you sell you investment property and buy a similar type of property. There are several 1031 exchange properties in Salt Lake City but before you think of acquiring them in place of your relinquished property, it is important for you to understand some key things about this tax deferring solution. Let’s take a look at them.

  • Back in old days, people were exchanging things such as patents, vehicles, aircrafts, and whatnot. If you think you can do the same with 1031 exchange, then you are mistaken. Now, you can exchange only business or investment property with the help of 1031 exchange.
  • In order to make the 1031 exchange completely smooth and stress-free for yourself, we will advise you get a Qualified Intermediary from the beginning of the 1031 exchange process. These are professionals who are well-versed int this tax deferring strategy and can make the whole process simpler for you.
  • The exchange can happen in two ways. You can either first sell your relinquished property and purchase a similar type of property layer. This is known as 1031 forward exchange. Or, you can buy a new replacement 1031 exchange property in Salt Lake City first and then later sell your relinquished property. This is known as 1031 reverse exchange. Keep in mind that reverse exchange is known for being a bit complex.
  • You have the freedom to identify several replacement properties in 1031 forward exchange. Once you sell your relinquished property, you have 45 days to look for several replacement property. Within these days, you can select up to three replacement properties. You can also select many more properties if their valued does not go above 200 percent of the original property.

Apart from these, keep in mind that you have 180 days to finish your 1031 exchange. When looking to buy or sell 1031 exchange properties in Salt Lake City, take help from a Qualified Intermediary. You can get in touch with an experienced QI online easily.

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