Tax Deferred

In most cases, you can defer taxes on the sale of investment or commercial real estate by engaging in what's known as a 1031 exchange. Section 1031 of the Internal Revenue Code allows investors to defer federal and state capital gains taxes if they purchase like-kind replacement property within no more than 180 days from the date of sale. As long as the 1031 requirements are met, the investor will defer federal capital gains taxes of up to 15 percent and depreciation recapture taxes of up to 25 percent, plus applicable state taxes.

These types of exchanges have grown in popularity over the years as the IRS has clarified how they may be properly implemented. One advantage of such tax deferred exchanges is that investors can use them to meet their strategic investment goals.

For example, it may be important to some investors to preserve equity. Paying taxes at the time of sale can on occasion effectively reduce the taxpayer's actual equity in a replacement investment. A 1031 exchange, in contrast, allows the taxpayer to leverage the entire amount of his or her investment, including gains, for reinvestment in more profitable commercial real estate. When all federal and state capital gains are deferred through a 1031 exchange, it is as though the investor is getting an interest-free loan from the government to use for re-investment.

TM 1031 Exchange facilitates such tax-advantageous investments through a national referral network for quality investment properties. We refer buyers of replacement properties to sellers who have properties that meet their investment criteria. For more information on these properties or to contact a representative, please call 1-877-4TM-1031 or send us an email here team@tm1031exchange.com.