1031 Tax Deferred Exchanges

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1031 Tax deferred exchanges allow the taxpayer to sell one investment and purchase another at equal or greater value and defer the capital gain or recapture tax that would ordinarily be due upon the sale of the initial investment.


Improve the quality of your investments with a tax deferred exchange!

As a general rule, to avoid paying any capital gain taxes in an exchange, the investor should always attempt to:

  1. Purchase equal or greater in net sale price
  2. Purchase “like kind” property (must be in same classification)
  3. Reinvest all of the net equity in replacement property
  4. Obtain equal or greater debt on replacement property
  5. Title must be held in the same manner as relinquished property
  6. Use a qualified intermediary (never touch the exchange proceeds)
  7. Identify replacement property (ies) within 45 days
  8. Must acquire property (ies) within 180 days

Additionally, You can go to this source to answer your questions on 1031 tax deferred exchanges: Investment Property Exchange Services, Inc.

Another equally important topic is cooperation agreements.  To provide the other party to the transaction with notice of the exchange, real estate  agents should be using a cooperation clause in the purchase and sale agreements.  With cooperation agreements in place, buyers and sellers are agreeing to cooperate with you and your qualified intermediary to complete the exchange in a timely manner.

When a 1031 tax deferred exchange takes place, it is very important that the “qualified” intermediary follow the guidelines and not be on the list of “disqualified” parties, such as but not necessarily limited to:

  1. Employee of the exchanger (within 2 years)
  2. Attorney of the exchanger (within 2 years)
  3. Real estate broker or agent (within 2 years)
  4. An investment banker or broker (within 2 years)
  5. Accountant (within 2 years)
  6. A relative

Furthermore, San Antonio is in the top 10 markets in the USA.  That makes it a good time to improve your investments. Look for properties available here.  I’m here to help you with all of your property goals.  Call me today!

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