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One of the primary reasons that real estate owners sometimes turn to real estate exchangers is because of the tax benefits. Typically, if you exchange business or investment property for like-kind business or investment property, the Internal Revenue Service does not recognize a gain or loss, under IRS code Section 1031. If, as part of the exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss is not recognized. Properties are of like-kind if they are of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties. Real estate Exchangers can help property owners understand these distinctions, and move forward with successful real estate exchanges.
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