What is “Substantially the same” in a 1031 exchange, and what is the 75% rule?

When doing a 1031 tax deferred exchange, the IRS requires that a taxpayer acquire replacement property that is “substantially similar” to the replacement property that they had “identified” during their 45 day ID period. The replacement property cannot be different in nature or character from what they had described on their identification document. Typically speaking, […]

Read More
Domestic and Global 1031 Exchange Property Rules Explained

1031 Exchange Rules for U.S. and Foreign Properties

A 1031 exchange allows investors to defer capital gains taxes by reinvesting the proceeds from selling an investment or business-use property into another like-kind property. It’s essential to understand the distinct rules regarding domestic and foreign properties when conducting a 1031 exchange. Understanding Replacement Property Rules Domestic Properties: A U.S. property can only be exchanged […]

Read More
Understanding Basis in a 1031 Exchange

Understanding Basis in a 1031 Exchange

When discussing 1031 exchanges, the concept of ‘basis’ becomes crucial. But what does it mean in the context of a 1031 exchange? Essentially, the basis of the replacement property acquired in a 1031 exchange is the same as the basis of the relinquished property, subject to certain adjustments. This basis carries over from your old […]

Read More
1031 Exchange Eligibility and Key Requirements

1031 Exchange Eligibility

Diving into the intricacies of 1031 Exchanges requires a thorough understanding of its requirements, given its role as a strategic tool for deferring taxes on real estate investments. Key to leveraging this tax-deferral mechanism effectively is ensuring that the participating entity is a taxpayer in the United States, encompassing a wide range of entities such […]

Read More
1031 vs 1033 Exchanges

1031 vs 1033 Exchange

A 1031 exchange and a 1033 exchange are both tax-deferral strategies related to the relinquishment of business or investment real estate and both are allowed under the Internal Revenue Code (IRC) of the United States. However, they each have unique applications that apply to different situations. 1031 Exchange: Whenever you voluntarily sell business or investment […]

Read More