To purchase great commercial properties, there is no better place than in the San Diego Area. Contact a San Diego commericial brokers who can guide you toward more profits taking advantage of the 1031 exchange.

The name 1031 Exchange, comes from the Internal Revenue Code Section # 1.103) is a code that can end up saving individuals money on certain business and investment property transactions. If any profits were made from the sale of real estate property or personal property, then ‘Profit or Capital Gain’ taxes will have to be paid. There may be an exception, however.

The 1031 Exchange allows sellers of real estate and personal property to be exempt from paying the ‘capital gains’ taxes if they are “exchanging” the property they sell, for a new property of “like-kind”. This code applies to business property and investment property.          

Use the example of selling a property which had been used as an office, and then buying a similar property to be used for the same purpose.The profits made on the sale will not be taxed. As long as it is going to be used for the same purpose as the one sold, the new property does not have to be the same size.A property being purchased for investment purposes can be sold to buy a different property for investment purposes, without taxing the profit. The broad definition of exchanging for a “like-kind” property allows for flexibility.

Many times, there are some time factors to be considered. Buy the new property within 180 calendar days of the sale of the original property.It can often be more financially efficient to make the sale and purchase as close in time as possible. The 1031 code mandates that a qualified intermediary be used after 45 days of the sale to ensure that the gains are used towards the purchase of the new property. This will prevent some individuals from using the profit for their financial gain.

 

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