Investors across the State of California know the frustrations of capital gains taxes all too well. For those that actively invest in property, however, a 1031 exchange may be a highly worthwhile option to consider. The escrow officers at Inspire are well versed in 1031 exchange guidelines and regulations, and have the in-depth experience to help make the process as straightforward as possible.
Also known as “like-kind exchanges” and written into the IRS code itself, 1031 exchanges in essence involve the swapping of qualifying investment properties that substantially reduce or even eliminate the capital gains tax obligation at the time of the real estate transaction. In fact, these taxes can be set aside long term if not indefinitely, making 1031 exchanges a real boon for real estate investors.
While 1031s come with some exceptional benefits, it is vital to note that the rules that govern them are quite stringent and intricate at times. With certain exceptions, 1031 exchanges can only be used when “like-kind” business or investment properties are involved. Thankfully though, there seems to be a great deal of latitude in terms of what can be thought of as “like-kind”. Other central stipulations involve the value of the properties, the usage of funds deriving from the transactions, and the timing of the transactions.