Title Tip – IRS Section 1031 Tax Deferred Exchanges – Still a useful strategy!
In the “Old Days” (back when the real estate industry was continually going up) people were making good use of the Section 1031 Tax Deferred Exchanges to shelter their capital gain on the sale of their real estate. In current times, people have NOT been worrying about sheltering their “gains” from a sale ….for obvious reasons.
However, at the low point in a market is exactly when people need to be planning ahead towards the better times. The market for real estate will continue to improve and with it will be increases on the price for a given property. So an investor, who is able to take advantage of the bargains in today’s real estate market, can further benefit from a sound tax strategy. And “strategy” is a key word here. Too often, people are “reacting” to the tax consequences of a “profitable” sale of real estate – rather than planning ahead as they make their moves.
If you are dealing with a customer who is making an investment in a piece of real estate (does not apply to their primary residence), encourage them to speak with a tax professional. This is really a great way they can maximize their return – by reducing or elimination the tax consequences.
Disclaimer – this information is NOT legal or financial advice, and should not be used as a substitute for the same. It is offered for informational purposes only. Many different factors can influence the proper course of action for a particular situation. Please seek the advice of a qualified professional for guidance with your specific transaction.