How A 1031 Tax Deferred Exchange Helps Owners Of Business Property For Sale

information about taxes in regards to real estateOwners of business property for sale have to pay taxes on their profits. After the generous depreciation allowance, this amount can be high and limit funds available for reinvestment. A 1031 tax deferred exchange allows sellers to postpone paying the taxes due if certain conditions are met. Although the rules for the exchange are easy to work with, the time frames for compliance are set in stone. If these time frames are missed, the IRS disallows the exchange and demands the thousands or hundreds of thousands of dollars in taxes. Sellers can protect themselves by working with a commercial real estate agent who specializes in this process.

Rules of a 1031 Tax Deferred Exchange

Investors must replace the property with like property of equal or greater value. This does not mean that an office building can only be replaced with another office building; it means that investment property must be replaced with investment property. If undeveloped industrial land is sold, a medical building can be purchased. Business property selling for $475,000 must be replaced with real estate worth $475,000 or more.

Time Frames

From the day of closing, the seller has 45 days to identify replacement property and 180 days to purchase it. This time frame is much more generous than it sounds as real estate transactions take months. Experienced agents help their sellers find replacement property as soon as an offer is received and accepted. With this process, property owners have adequate time to locate, inspect and purchase new property without stress.

The 1031 tax-deferred exchange allows serious investors to capitalize on real estate transactions. As the tax from the sale is deferred to a future time, sellers decide when to pay the IRS. This allows more money for investments as these owners of the business property for sale use all of the funds received.

About bob

Bob Stewart has written 44 post in this blog.

Bob Stewart,Vice President for CB Richard Ellis/Hubbell Commercial, is recognized in the greater Des Moines community as one of the top commercial real estate producers. With 30 years of experience in the commercial real estate industry, Bob brings energy, enthusiasm and professionalism to effectively represent tenants, landlords, developers and investors in reaching their real estate goals. His background includes practicing law for 12 years in Colorado and Iowa, and being a commercial real estate broker in the Greater Des Moines Area for 18 years. Bob is personally involved in the development of office parks, community shopping centers and build-to-suit opportunities, giving him first-hand knowledge of the development process to better aid his clients. He has developed Stratford Commons Office Park in Clive, IA and Windsor Office Park, in Johnston, IA. Bob has also assisted in building Bible schools, elementary schools, churches and orphanages in Bangladesh, Bolivia, Bulgaria, Cambodia, Chile, Columbia, Cuba, El Salvador, Ethiopia, Hungary, Kenya, Latvia, Poland and Venezuela.

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About bob

Bob Stewart,Vice President for CB Richard Ellis/Hubbell Commercial, is recognized in the greater Des Moines community as one of the top commercial real estate producers. With 30 years of experience in the commercial real estate industry, Bob brings energy, enthusiasm and professionalism to effectively represent tenants, landlords, developers and investors in reaching their real estate goals. His background includes practicing law for 12 years in Colorado and Iowa, and being a commercial real estate broker in the Greater Des Moines Area for 18 years.

Bob is personally involved in the development of office parks, community shopping centers and build-to-suit opportunities, giving him first-hand knowledge of the development process to better aid his clients. He has developed Stratford Commons Office Park in Clive, IA and Windsor Office Park, in Johnston, IA. Bob has also assisted in building Bible schools, elementary schools, churches and orphanages in Bangladesh, Bolivia, Bulgaria, Cambodia, Chile, Columbia, Cuba, El Salvador, Ethiopia, Hungary, Kenya, Latvia, Poland and Venezuela.

Commercial Real Estate Agent for the Greater Des Moines Area