Home | Finance | Taxes
The process of a Section 1031 tax exchange is one that should be ventured into with a good deal of thought and planning; it presents the incautious real estate investor with ample opportunity for costly errors. Taking this into consideration, you might be somewhat skittish regarding beginning a 1031 exchange without being certain that you'll be able to follow it to its end. In all actuality, though, the risks involved in an exchange don't have to be as unmanageable as they might, at first glance, appear. Starting a 1031 exchange isn't in any way a total commitment – as a matter of fact, many smart real estate investors, when selling a piece of property will start the 1031 exchange process simply for the purpose of leaving the option of exchanging open. This is because, if one starts out with the intent of exchanging, there exist several chances to back out and simply sell the property, while beginning along the path of selling outright removes altogether the option of a 1031 tax exchange. There's actually no reason to be afraid of the possibility of having a change of heart in the course of an exchange. All you really have to do in order to keep your options open is to be aware of the deadlines involved in the process of an exchange, as they will be the major determining factor of when you'll get the opportunity to receive the proceeds that would've been put towards your replacement property had you chosen to go through with the exchange. After closing on your relinquished property's sale, the proceeds are transferred directly to your intermediary. After this has happened, the the first opportunity you will have to take back your proceeds from the intermediary is after a period of 45 days, by which point you are supposed to have identified a suitable replacement property. If this deadline arrives without your having identified a replacement property, the exchange will automatically be terminated and you'll be able to receive your proceeds. If you have identified a replacement property before deciding that you would like to terminate the exchange, you can simply revoke that identification before the 45 days have passed, and the result will be the same. If you're past this step in the process, the next opportunity you will have to collect your proceeds will be 180 days from the end of the forty-five day period, the deadline assigned for closing on a replacement property. However, if your tax return occurs during the 180 days, you can shorten this time frame. As long as you don't ask for an extension on your return, you are able at this point to inform your intermediary that the exchange has been terminated and receive your {proceeds. At the end of the day, it is always a good idea to be prepared for any circumstances that might arise; beginning the 1031 process when you're uncertain what the future may hold can, in fact, be to your advantage, in that it keeps all of your options open. Provided that you make sure to keep aware of the deadlines involved in the 1031 exchange process, you can have the freedom to change your mind regarding the exchange if your circumstances change.
Article Source: http://www.articlegush.com
Many Types Of Investment Property Qualify For A 1031 Tax Exchange. Be Sure To Consult With An Expert That Offers 1031 Exchange Services To Maximize Your Tax Savings. More Information Is Available At www.Top1031Exchange.com
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
