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Tax-Free Investing No one likes to pay taxes, even when receiving the favorable capital gains treatment levied on the sale of an investment. And, while death and taxes may be inevitable, there is an opportunity within the law to defer taxes on certain investment gains until another day. The rules to do so are stricter than they are complex, so adherence to details is critical. The many names used to describe these rules all refer to the same U.S. Government's IRS Code Section 1031 and can be summarized as follows: No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment, if such property is exchanged solely for property of a like-kind which is to be held either for productive use in a trade or business or for investment.Section 1031 is a valuable procedural tool for all investors to consider - it allows for the deferring of taxes, thus providing more current dollars to reinvest. It is a legalized strategy for "trading up" by using before tax dollars. The most common form of Section 1031 exchange is the Third Party Exchange. It is so named because it allows for a "third party", with no financial interest in the transaction, to act as an "Intermediary". By use of this strategy an investor can qualify for the tax deferral advantage without the need for any simultaneous transfer or exchange into other investments. The window to identify a new investment or even multiple investments opens after the sale is finalized. All too frequently investors, because of the strict rules of compliance required, ignore this strategy. LANDMARK COMMERCIAL LTD is ready, willing and able to assist and advise you. The additional cost of following the IRS rules is minimal and is returned many fold in terms of current investment dollars available to make a subsequent investment. Contact us for more information about Exchanging Investments. |
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