Tax-free Property Exchanges Information
The Herbert Law Firm, LLC - Gulf Shores, Alabama
No one wants to pay more in taxes than is required. IRS Section 1031 can allow you to exchange similar properties without recognizing a gain or loss for tax purposes. The information below will help you understand how a 1031 exchange can save you money on your real estate transaction.
At the Herbert Law Firm, LLC, we have years of experience guiding clients through the process of like-kind exchanges. The rules are strict and can be complicated, but an experienced lawyer will provide you with the information and advice you need to complete a successful exchange.
How Our Firm Helps with 1031 Exchanges
At the Herbert Law Firm, LLC, we will walk you through the process of a 1031 exchange from beginning to end. We will provide you the personal attention that you need to feel comfortable with the process and your attorney.
Types of Property that Qualify for 1031 Exchanges
Property held for productive use in a trade or business, or property held for investment may qualify for 1031 tax deferral. Property held outside the United States and its territories does not qualify for exchange with property held within the US.
The Process
We will guide you through the 1031 exchange process, but here are some details about the process to get you started.
- Decide that you want to complete a 1031 exchange before you sign a contract or sale/purchase agreement.
- Contact us to act as a qualified intermediary. This means that we will hold the funds from the closing on your relinquished property and provide those funds for the purchase of the replacement property.
- When you relinquish the property, execute a deed and sign closing papers. At this point, the funds will go to the qualified intermediary under the terms of our exchange agreement.
- You have 45 days after the closing to identify a replacement property and notify the qualified intermediary, our firm.
- Remember that you should trade up or even in value. The IRS treats forgiveness of debt as income.
- Sign purchase agreements for the replacement property.
- Close on the replacement property within 180 days from when you transferred your relinquished property or by the due date for your income tax return.
- Let us know when you close, and confirm that the funds have been received by the closing agents.
- Receive the title to the replacement property and report the details of the exchange transaction on your annual tax return.
Completing a successful 1031 exchange can help you save money, but it must be done properly. Contact us for a free initial consultation to discuss whether your exchange will qualify as a tax-free property exchange.
Herbert Law Firm, LLC
Our Office Location
1544 West 2nd Street
Gulf Shores, AL 36542
Telephone: 251-968-4764
Fax: 251-968-7955
E-mail us
Our Mailing Address
Post Office Drawer 3889
Gulf Shores, AL 36547