If you own investment property you might want to look into a 1031 tax deferred exchange. This could allow you to defer paying capital gains tax on your gain from the sale of your property by exchanging for another property of "like kind" in the Asheville NC area.
IRS 1031 tax-deferred exchange is a method by which a property owner trades one or more properties for one or more replacement properties of "like-kind", while deferring the payment of taxes.
When a property owner has reinvested the sale proceeds into another property, the gain has not been realized in a way that generates funds to pay tax. The taxpayer's investment is still basically the same, only the form has changed.
The like-kind exchange is tax-deferred, not tax-free. When the replacement property is ultimately sold, the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.
A quick overview:
- Identify the replacement property within 45 days (called the Identification period) of the initial property transfer date.
- Identify three properties of like value or as many properties as necessary to total the fair market value of the property you are exchanging.
- You must close on the replacement property within 180 days of the initial transfer/sold date of your original property.
- If the real estate exchange is not simultaneous, you must use a qualified intermediary to hold the money until the exchange is complete.
- If you end up with cash to even out the value of the two exchanged properties, that cash is taxable at current capital-gains rates.
Before performing a 1031 exchange contact your accountant and/or attorney and make sure you understand all the tax issues and have all the facts. The above is just a quick overview of the 1031 exchange program.
NOTE: Please check for current up-dates, this information could be out of date.