1031 Like-kind Exchange Extension Deadline In Response to COVID19

Posted by Kathryn Vallee on Friday, April 10th, 2020 at 5:57am.


APRIL 2020

The Internal Revenue Service just released the new guidelines and extension date of July 15, 2020, for 1031 Exchange like-kind property as any held for investment, trade, or business purposes under Section 1031. In a 1031 Exchange, under the Internal Revenue Code Section 1031, if you make a like-kind exchange, you are not required to recognize a gain or loss. In the event, you receive other (not like-kind) property or money, you must recognize a gain to the extent of the other property and money received. The rule stipulates that you cannot recognize the loss.

A popular process used by many investors to defer paying a tax gain. We may see more 1031 Exchanges in 2020 due to the increased equity gains that we have seen in the past 8 years. Many investors will cash out of more expensive properties in seek of a real estate market that offers a better cash flow opportunity. Shifting the focus of their investment without triggering a tax liability is a smart game plan. Shifting out your investment from a high maintenance property into a newer property with less maintenance can be beneficial. You swap one property for another.

It is imperative that you understand the rules of engagement prior to selling a property under section 1031. A property under a 1031 exchange portfolio has limitations for personal use. Four types of exchanges; simultaneous, delayed, reverse, and contraction or improvement. In addition, there are several rules and guidelines to follow in a timely manner. The complexity of a 1031 Exchange requires professional guidance in order not to jeopardize the deferment of your capital gains taxes. Forbes has written a really great article that further explains the details for a 1031 exchange. 

For more information, Contact Michael Anderson, President, Zions Bank subsidiary Exchange Services, LLC. He is fantastic and will help you keep wealth when changing real estate investments.







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