The 411 on 1031-Exchanges | Part 1
At Geswein Farm & Land, we’ve assisted investors, farm families, and farmland investment funds in locating, acquiring, and selling farmland, vacant land, wooded properties, recreational properties, and developmental or transitional land for 1031-Exchange purchases since 1977. We take the time to get to know each and every client so we can best assist in meeting their goals. If you’re interested in reviewing properties for a 1031 Exchange purchase or would like to know what your land is worth, contact #yourlandman – Johnny Klemme at (765) 427 - 1619 or firstname.lastname@example.org.
What's the value of my land?
Contact Johnny Klemme at (765) 427 -1619 or email@example.com
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1031 Exchanges -- Deferring Taxes on Real Estate Investments
What is a 1031 Exchange?
Real estate is considered one of the safest ways to invest money, and 1031-Exchanges make it possible to compound gains without paying taxes. This tax method has been in existence for quite some time and is utilized by investors to assist clients in growing their assets.
But what how does it work?
Sell property -- You sell your property. With luck and planning, your property will have accrued equity since purchase.
Qualified Intermediary -- The proceeds from the sale are held by a ‘Qualified Intermediary’. The money may never be in the owner’s possession.
Identify Next Property -- To defer taxes, the following property needs to be the same price or higher.
Purchase Property-- Using the proceeds from the previous sale (and additional funds, if desired) purchase the subsequent property.
Accrue Equity-- Diversify your financial portfolio with strong real estate investments, and watch your net worth grow.
Repeat Process -- There is no limit to the amount of times you can defer payment on real property. This is why so many investors utilize real estate as investments.
Rules & Guidelines
There are rules and guidelines that must be followed to stay within the parameters of a 1031 Exchange Real Estate purchase.
Qualified Property -- To be eligible as a 1031 Property, it may not be used as a ‘flipped’ property. It must be used for business or investment purposes.
Qualified Intermediary -- Typically an attorney, holds the proceeds from the sale of a 1031 property until the next property is purchased.
Timeframe -- The replacement property must be identified within 45 days of the sale of the previous property.
Amount -- The property value amount must be the same or more than the previous property to avoid taxes.
Percentage -- The value amount of the new property may not exceed 200% of the previously owned property.
Title Holder -- The owner (individual or entity) must remain the same throughout purchases.