1031 Tax Deferred Exchanges: What to Know
As previously discussed, there are several advantages to using a 1031 Tax Deferred Exchange. However, it is imperative that property owners carefully follow the IRS guidelines for selling and purchasing property.
To avoid the payment of capital gain taxes, you should follow three general rules:
Performing a Tax Deferred Exchange requires making sure your “i’s” are dotted and your “t’s” are crossed. To avoid a potential audit by the IRS, you need to make sure that the required documentation (along with the procedures for implementing a deferred realty exchange) are basically “bulletproof”. Therefore, consult a qualified tax professional or attorney before proceeding with an exchange to be sure that all your bases are sufficiently covered.