Finance Articles

A sound knowledge of 1031 exchange rules is extremely useful and important to real estate investing entrepreneurs. If the rules are studied and implemented in the right way it will save you lots of money in taxes! By simply doing some research you will increase profit and avoid problems associated with 1031 exchanges.

The most important thing to know about 1031 exchange rules are the deadlines. You must purchase a replacement property within one hundred and eighty days after the sale has been registered or before the next filing deadline. But there is also a forty five day identification period in which time you must use one of three methods to identify properties that you are considering for exchange.

In order to increase your tax deferrals, all money from the sale of your property ought to be reinvested directly into a new property. The 1031 exchange rules explicitly explain that one cannot apply proceeds from this sale to pay off expenses that are not involved in the exchange. In order to obtain the maximum tax benefit out of these expenses, one should manage them separately in the settlement and include a footnote, then write a separate check to your buyer.

If you live in a different state to where the property is sold, many states mandate that the closing agent or real estate agent must withhold a percentage of the sale price to make sure that the state receives any tax revenue due, because tracking down these non residents later can be very difficult.

For foreigners the real property tax act that was enacted in 1980 requires the payment of at least a ten percent withholding of the sales price. Depending on which state you are in this requirement may be waived, so it is wise to check the laws of the state your in.

You must use a qualified intermediary who completes all the necessary paperwork and filing and must adhere to the 1031 exchange rules. There are many places on the internet where you can find 1031 exchange information and you can even find qualified intermediaries in your state.

Go to http://www.investing-secrets.com/1031-exchange/recommends/article-1031 to get hold of a copy of this article for your own site.

As a real estate investor, you must understand 1031 exchange rules to save significantly on your taxes. 1031 exchanges require you purchase your replacement property one hundred and eighty days after filing a transaction. For the best tax deferral, invest all of your money from the sale of your property into the new property that you buy. If you buy in a new state, you will need your broker to withhold a percentage of the sale for you tax bill. As you look for someone to assist you, only put your faith in a qualified intermediary. Search for 1031 tax exchange information online and select someone who can help.