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Our multidisciplinary team of experts brings to the table a fusion of skills, ensuring every interaction and transaction is seamless. We pride ourselves on providing comprehensive compliance guidance and solutions that set our partners apart. We are more than a service provider; we are a consortium of expertise, dedicated to forging robust connections across the 1031 replacement property landscape.

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Collaborating with Four Springs is straightforward and rewarding. Professionals interested in joining our network or learning more about our services can contact us through our website. We invite you to schedule a consultation, attend one of our educational webinars, or start a dialogue with one of our team members. Contact our team >

How to Defer Taxes with a 1031 Exchange

In the simplest terms, a 1031 exchange is a tax deferred swap of one asset for another of like-kind. It is widely used by property investors, and net lease properties have become popular replacement properties for investors due to the long-term nature of the leases, the rental income and the limited management responsibilities. However, despite their prevalence, 1031 exchanges can be complex and remain confusing to many investors.

THE 5-STEP PROCESS FOR A 1031 EXCHANGE

GENERAL RULES OF 1031 EXCHANGE

1

Purchase
equal or greater
in value.

2

Reinvest
all of the equity in
replacement
property.

3

Obtain equal or
greater debt
on replacement
property

In a 1031 transaction the capital gains taxes are deferred, not eliminated. It is important to note that when the replacement property is ultimately sold the original deferred gain and any additional gains on the replacement property will be subject to tax. The exception being if the replacement property is sold as part of another 1031 exchange. Taxpayers must report an exchange to the IRS on Form 8824, Like-Kind Exchanges and file it with their tax return for the year in which the exchange occurred. While 1031 exchanges require careful planning and close oversight, they are a powerful tool to preserve an investor’s purchasing power.

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