It is currently possible to you to defer paying income taxes upon the profit arising from your sale of real property held for investment through a Section 1031 Tax Deferred Exchange, subject to certain conditions. The conditions are as follows:
- You are selling a property which you held for investment purposes.
- You are going to buy another property which you intend to hold for investment purposes.
- The purchase price of the new property is approximately the same as, or is greater than, the sale price of the old property.
- All cash received from the sale of the old property is invested in the new property.
- You have complied with the 45 day Identification Rule and the 180 day Closing Rule established by the IRS.
- The profit is sufficient so that the tax savings justify the cost of undertaking the tax deferred exchange.
A tax deferred exchange can be undertaken even if the properties are located in different areas of the country, or if one property is an improved property (home or villa) and another is a lot or acreage, or if one property is a residential property and another is a commercial property.
Our firm has been assisting clients undertake tax deferred exchanges for over 30 years. As an Intermediary is required in connection with undertaking tax deferred exchanges, we work closely with Hilton Head Intermediary, LLC, an unrelated Intermediary company located here.
Mr Wolf has prepared a booklet that describes in greater detail the benefits of Section 1031 Tax Deferred Exchanges, the requirements that must be met, and the cost of undertaking such an exchange. It is free upon request. Please do not hesitate to contact us if you would like a copy.