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Combining 1031 Exchanges and Estate Planning

By Drew McCabe | March 25, 2019

Reverse 1031 Exchange Services in Denver ColoradoSection 1031 Like-Kind Exchange and Estate Planning

A taxpayer and their heirs can benefit greatly from a 1031 Exchange when selling business- or investment-use real estate:

  • Pay no tax at the time of selling the property, which allows for maximum reinvestment buying power.
  • Reinvest in other business- or investment-use property in order generate/replace monthly income; with an eye on appreciation, diversification and/or consolidation.
  • Active investments such as single- or multi-family rentals, commercial or industrial properties
  • Passive investments such as raw land, or Delaware Statutory Trust fractional ownership properties
  • The taxpayer’s heir or heirs inherit the replacement property with stepped-up basis, meaning that the value of the property is reset to the prevailing market price at the time of the trust owner’s death. In this case the 1031 Exchange tax deferral becomes permanent tax forgiveness!
  • Under current tax law, each decedent may gift up to $11 million before an inheritance tax is assessed on the estate.

If a taxpayer is unsure of the benefits of a 1031 Exchange or of whether or not it makes sense for their financial situation, we strongly recommend they consult with their tax, legal and/or financial planning professionals before selling real estate. We are happy to speak with anyone involved regarding Section 1031 benefits, requirements and processes. Give us a call at 303.789.1031

Sincerely,

The Exchange Resource Group Team

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IRS Extends 1031 Like-Kind Exchange Deadlines in the Wake of Various Natural Disasters

Each listed Disaster Areas has its own Disaster Date on which tax relief, including the extension of 1031 Exchange deadlines, is keyed. The IRS’s Disaster Relief Notices, in conjunction with Revenue Procedure 2018-58, give taxpayers two options to extend their 1031 Exchange deadlines: a general relief option (for Exchanges in progress on or after the Disaster Date) and an extended relief option (for Exchanges in progress on or before the Disaster Date). Depending on when your Exchange began, you may qualify for one or both of these options.

Please consult with your tax advisor for further guidance. The Notice reference and Disaster Date for each Disaster Area follows.

Click here for the full article

Sincerely,

Drew McCabe, President
Exchange Resource Group, LLC

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