Deferred Exchange

The real estate market of the last several years has left many investors holding properties that would be subject to substantial capital gains taxes if disposed of. Section 1031 of the Internal Revenue Code and a court decision known as the Starker decision provide investors with a way to defer paying these taxes. Section 1031 provides that gains will not be recognized if the asset disposed of is replaced with a like-kind asset of equivalent or greater value.

The Starker decision allows for a time delay in the acquisition of a replacement asset. Under IRS guidelines, the taxpayer actually has a maximum of 180 days to replace the property, provided that the replacement property is identified in writing within 45 days from the date of sale of the original property.

Transactions that fall within these guidelines are known as 1031 exchanges, Starker exchanges, or tax-deferred exchanges. In addition to timing requirements, the IRS also mandates that the proceeds of the sale must be handled by an outside party, usually referred to as a Qualified Intermediary or an Exchange Accommodator. The most common type of tax-deferred exchange is a delayed exchange in which real estate is first sold, and then replacement real estate is acquired.

One primary mission of TM 1031 Exchange is to help investors find investment real estate to serve as replacement property in 1031 exchanges. We do an independent survey of investment properties across the nation in order to put our clients in touch with sellers of properties that will help them meet their goals. To learn more about these properties or our services, please give us a call toll free at 1-877-4TM-1031. You may also send us an email here info@tm1031exchange.com.