What You Need to Know About a 1031 Exchange
What You Need To Know:
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A 1031 Exchange is one of the most powerful tax strategies available when selling and buying investment real estate property.
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Section 1031 of the tax code allows property owners to defer capital gains taxes on the sale of their real estate held for investment or business purposes and reinvest those proceeds into another investment.
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When contemplating the sale of investment property or when you’ve reached an agreement to sell investment property, contact CATIC Exchange immediately to help answer any questions about initiating a 1031 Exchange.
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An exchange agreement must be entered into prior to the first transaction closing. We will send you a documentation packet.
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CATIC Exchange is a full-service qualified intermediary (QI) and is needed to prepare the exchange documents and hold the proceeds from the sale in escrow.
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Contact CATIC Exchange at (860) 904-2108 or info@caticexchange.com if you have a question, need a recommendation, or want us to walk you through the process.
Why Consider a 1031 Exchange?
There are many advantages to structuring your investment transaction as a 1031 Exchange.
One of the primary advantages of a 1031 exchange is the ability to defer capital gains taxes. By reinvesting the proceeds from the sale of a property into a like-kind property, individuals, businesses, and families can postpone the payment of capital gains taxes, allowing them to leverage more funds for their next investment.
Continuously engaging in 1031 exchanges enables individuals and businesses to accumulate wealth over time. By reinvesting in properties with higher earning potential, participants can see significant growth in their real estate portfolios without being hindered by immediate tax liabilities.
1031 exchanges offer the opportunity to diversify real estate portfolios. Participants can switch from one type of property to another, such as exchanging residential properties for commercial ones. This diversification can enhance overall portfolio stability and mitigate risks associated with a specific market segment.
By strategically selecting properties with higher income potential, participants can boost their cash flow. This increased cash flow can be especially beneficial for individuals, businesses, and families looking to secure a steady stream of income for their financial goals.
1031 exchanges can play a crucial role in estate planning. Participants can pass on appreciated properties to heirs with a stepped-up cost basis, potentially reducing the heirs' future capital gains tax obligations. This strategic use of 1031 exchanges aligns with long-term generational wealth planning.
For businesses, 1031 exchanges provide a means to facilitate expansion in multiple markets. Reinvesting in larger or more strategically located properties can support business growth, enhance operational efficiency, and contribute to long-term success.
