If you already own an investment property and are looking to sell it, you might want to consider a 1031 exchange. Real estate investors have turned to 1031 exchanges to defer capital gain taxes on the sale of investment properties.
It is considered a wealth-building tool that can help you sell one investment property and purchase another while deferring taxes.
By exchanging one asset for another with the help of 1031 advisors in Utah, real estate property investors can trade up for significant scale assets or reposition their investment capital into different markets.
1031 advisors can help both novice and seasoned investors successfully complete 1031 exchanges.
However, 1031 exchanges can be complex. Therefore, this post comprises some tips from 1031 advisors that can help ensure a smooth and successful exchange:
* Marketability Of Your Replacement Property
This factor can sometimes be challenging to think about when you’re already under tight deadlines to close on a new property. However, it’s important to think two steps ahead in such scenarios as it’s essential to consider your replacement property’s current and future marketability. As a buyer, you won’t like buying a replacement property that isn’t marketable to prospective tenants and real estate investors. Hence, consideration of the marketability of your replacement property is a vital factor.
* Stay Up-To-Date On Rule Changes
Keep in mind that 1031 exchanges require you to move relatively quickly. You only get 45 days to identify a replacement property when you sell your investment property. You also have a period of 180 days from the original sell date to close on the replacement property. Additionally, it’s also vital to be well known about the latest tax code changes as they significantly impact 1031 exchanges.
* Signing The Documents Before Closing
We know that the 1031 exchange allows you to sell your relinquished property and acquire your replacement property at a later date. In order to make a purchase followed by an exchange, you are required to sign a document either on or before the closing date of your relinquished property. You’ll also be required to sign a document outlining an assignment of your rights under the contract and give the seller notice of the assignment.
Consider Experts In Your 1031 Exchange Process
1031 exchange process comprises many parts. Therefore, to ensure a smooth transaction, you’ll want to surround yourself with experts who can provide the necessary guidance to help you get to every step of the exchange. The best step is to consider a 1031 advisor that will help you hold the sale proceeds and assist you with the paperwork needed to ensure a successful transaction.
Conclusion
There are several ways of structuring a 1031 exchange, and everyone’s situation is unique. Therefore, consider a 1031 exchange advisor to make things go smoothly.
