Section 1031 Like-Kind Exchanges

Section 1031 like-kind exchanges

You may have heard colleagues talking about “doing a 1031” when referring to property acquisition, and it may even be something that can benefit you and your firm; however, it is important to clearly understand exactly what a 1031 Exchange is. That’s where we can help. Here at Woodford Financial, we’re experienced with implementing this savvy tax strategy. Essentially, a 1031 allows you to defer capital gains taxes on the sale of a like-kind real estate property. So, for example, if you sell a like-kind investment property and reinvest the money from that sale into another piece of higher value real estate, you can avoid paying the capital gains tax on the sale. That’s because there are no cash proceeds being given back to the seller; thus, no taxable amount for the IRS to claim.

There is one key ingredient to a successful 1031 Exchange: A Qualified Intermediary (QI). The IRS stipulates that the exchange must go through a special facilitator, a QI, who is responsible for holding cash proceeds from the sale of the old property and preparing the legal documents for the exchange. The QI forwards the cash to the closing agent of the new property to complete the purchase. If it sounds complicated, it can be, but our CPA firm is qualified and ready to help Woodford County, KY area investors reap the benefits of a 1031 Exchange.

Let us make the process an easy one! Call us now at 859-832-0500 or request your free consultation online to learn more.

Benefits of a 1031 Like-Kind Exchange

  • Defer capital gains taxes
  • Increase cash flow
  • Diversify your portfolio
  • Eliminate property management headaches
  • An estate planning strategy