It is no secret that real estate investors utilize Section 1031 to help grow their real estate portfolio with pre-tax dollars, but 1031 exchanges are just as beneficial for business owners. They allow businesses to move into more efficient properties while keeping more cash in their business, enabling the business to grow faster and have more employees with less leverage. Benefits for Business Owners When exchanging, in addition to deferring the capital gains, you also defer the depreciation recapture. For business owners who took bonus depreciation in recent years, this is especially benefici ..read more

Margo McDonnell and Marissa LoCascio, 1031 CORP.’s president and senior vice president, respectively, advocated for 1031 exchanges as part of an advocacy day at the Federation of Exchange Accommodator’s (FEA) Mid-Year Meeting in Washington, D.C. The event, held in April, brought together Qualified Intermediaries across the country to speak with legislators, committees and staff members on Capitol Hill. Education is a key tool for efforts to preserve the effectiveness of Section 1031 for investors, business owners, mission-driven organizations, and the communities where they operate. The “Day o ..read more

You have owned your rental property in Stone Harbor for nearly two decades. It provides a nice income for you, but with many newer properties on the rental market, yours is not as sought after as it used to be. You have many options to consider. Do you renovate, tear down and rebuild, or sell the property as is? While they are all worthy options, a 1031 exchange may be the right solution. A 1031 exchange enables the seller of an investment or business use property to defer the gain when buying replacement property and structured correctly. Section 1031 of the tax code is known as a tax-deferra ..read more

The 1031 exchange was set up, the apartment building has sold, and the rental cabin you've just closed on is in an ideal location. You are determined to have it ready for the winter ski season. You've done your 1031 exchange homework, talked with your tax advisor and your Exchange Team at 1031 CORP., and completed the exchange within the 180-Day Exchange Period window. But there's a problem - the replacement property suddenly cannot be rented! Without the ability to rent the property, you want to sell!     You're out of luck because short-term holding periods do not qualify for a 103 ..read more

Section 1031 provides a tax strategy to defer gain when exchanging properties held for investment or use in a trade or business. A personal use property, such as a primary residence or second home, does not qualify, even though everyone would likely agree that all real estate is acquired for future appreciation. Under Section 121, homeowners can qualify for a $250,000 ($500,000, if married filing jointly) exclusion from gain when selling property used as their primary residence for at least 24 of the last 60 months. Unfortunately, vacation homeowners have no easy way out u ..read more

Your storefront, warehouse, or small office building is part of a $2.3 trillion contribution that commercial real estate made to the annual US gross domestic product (GDP) in 2022. And that doesn’t count residential investment or agricultural real estate. 1031 exchanges were involved in 10-20% of these commercial real estate transactions in 2022. Exchanges have a big impact! Exchanges are more than just part of the real estate market—they contribute to the health of the market, helping create stability, mobility, and growth. As you know, 1031 exchanges, also known as like-kind exchanges, defer ..read more

Properties involving mixed uses (combining personal use and business use) can be exchanged under Section 1031. The portion of the property used as business use will qualify for tax deferral treatment under Section 1031. Depending on its use, the portion of the property used for personal use may qualify for the $250,000 ($500,000, if married filing jointly) primary residence exclusion (under Section 121, also known as the Home Sellers’ Exemption). Additionally, you can acquire a property that would have mixed uses. Some examples of properties that may have mixed uses are owner-occupi ..read more

As the seasons change and summer is in the rearview mirror, we long for the warmer weather and our feet in the sand at the beach. It’s also when renters begin searching for the perfect beach rental for next summer. The ability to work remotely has created a greater demand for beach rentals, which has driven up rental rates, making beach properties a desirable investment.  A 1031 exchange is a century-old tax strategy to defer gain when selling business use or investment property and reinvesting in another. In addition to deferring the state and federal gain, investors can also defer the r ..read more

The Exchange Process from Start to Finish Back to basics: As the Qualified Intermediary (QI), 1031 CORP.’s role is to facilitate the exchange process and make it easy for you to complete your 1031 exchange. Among other steps, 1031 CORP. will prepare the necessary exchange documentation, coordinate the exchange details with all parties, keep you aware of the timing requirements, hold the proceeds from the sale, and answer any questions throughout the exchange process. The principle behind Section 1031 is the continuous investment in like-kind real property. A 1031 exchange allows you to defer c ..read more

To meet the same taxpayer requirement of Section 1031, and for an exchange to qualify, title to the replacement property must be taken the same way it was held on the relinquished property. This rule applies to any taxpayer, from an individual to an entity such as a partnership, LLC, trust, or corporation. Since an exchange is considered a continuation of the original investment in the relinquished property, title must reflect that continuation on the replacement property. As with many rules, however, there is one exception: the use of a disregarded entity for tax purposes. In a ..read more