1031 Exchange – Is this really legal?
“Is this really legal?” was a repeated question from last week’s seminar “Double your Commissions with 1031 Exchanges” at the Cape Coral Association of Realtors, Inc. The answer? A resounding “Yes!” The most useful things participants said they took away from this FREE three-hour continuing education class were the tools to help their clients legally avoid paying capital gains tax, while transitioning from one investment property to another – and double their commissions at the same time. 1031 Exchanges are not only legal, but are an incredibly savvy strategy to keep 100% of profits generating revenue for investors as long as they continue to invest. This can be as simple as rolling all the proceeds from the sale of a vacation rental in Winter Park, Colorado, into an office building in Cape Coral, Florida, or as complex as using investment sale proceeds to transition into 15 floors of office space, as the Sumitomo Corporation of America just did in Chicago. Named after the section of the tax code where this opportunity to defer tax on gain is found, the IRS has also provided additional information on 1031 Exchanges in its own Tax Gap series fact sheet entitled Like-Kind Exchanges Under IRS Code Section 1031. This information prompted one course participant to comment, “It’s great to have knowledge of the tools available to better-serve our clients”. Those tools included:
- Understanding why an investor would use a 1031 Exchange
- Six requirements for a 1031 Exchange
- Held for Investment
- 45 Day & Identification Rule
- 180 Day Rule
- Exchange Facilitator/Qualified Intermediary Requirements
- Title Requirements
- Reinvestment of Cash / Equal or Up Rule
- Recognizing and avoiding common 1031 Exchange issues
- Identifying 1031 opportunities to double commission dollars
If you are interested in obtaining additional information about 1031 Exchanges or this class, which is available for three FREE hours of continuing education credit at your Florida venue, please contact Dave Foster at 85O-889-1O31.
Written by Dave Foster