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How to Sell Your House without Paying a Penny in Taxes!
If you've ever dreamed of selling your investment property without having to pay any taxes, it's time to wake up. In fact, it's time to wake up to the reality that you really can sell your properties today and not have to pay a single penny in taxes. The IRS passed a law that allows investors to build equity more quickly and defer capital gains on qualifying real estate investments-both of which add up to more money for you…and absolutely no capital gains taxes!
What Is It?
When you perform a 1031 Tax-Deferred Real Estate Exchange (or Starker Exchange) rather than a traditional sale of your investment property, you can defer all capital gains on your real estate investments. A 1031 tax deferred exchange allows you to roll-over all of your proceeds from the sale of your investment property into the purchase of one or more other "like-kind" investment properties. A "like-kind" investment property is defined loosely by the IRS as investment property for investment property. For example, you can't use the 1031 Exchange for the sale of your personal residence. The properties-both the sold and the new-must both be for investment purposes.
How Does It Work?
When you close on the sale of your investment property, the proceeds are actually transferred to a third party known as a "facilitator" or "qualified intermediary." The facilitator takes possession of the funds until they are used to purchase the new investment property. There are strict regulations involved in the timing, type, and procedural steps necessary to maximize the benefits of the 1031 Exchange. The key, then, is making sure you follow the letter of the law exactly if you want this IRS law to work for you.
Why Do It?
If you own investment property and are looking to sell-buy new investment property, the benefits of the 1031 Exchange should be obvious. With your capital gains taxes deferred, all of the funds from your initial sale go toward the purchase of the like-kind investment property. In other words, that deferral is like getting an interest-free loan on all the taxes you would have previously owed on a cash sale. Because more of your equity is retained in the process, you are able to establish a greater value for your investment with every new purchase and 1031 exchange.
To learn more about how the 1031 Tax-Deferred Real Estate Exchange can work for, please contact one of our agents on the Vickie Kimsey Team. We'll be glad to discuss how you can make the most of this exciting real estate investment opportunity.
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