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Thinking about a real estate swap? Use a go-between

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in Small Business Tax,Small Business Tax Deduction Strategies

Instead of making an outright sale of commercial or investment property, the tax law enables you to “swap” it for like-kind property without paying any current tax. However, things aren’t usually so cut-and-dried in the real world. For one thing, it’s unlikely the potential buyer of your property will own any real estate you desire.

Strategy: Use a “qualified intermediary” to facilitate deals. The intermediary can be inserted in the middle of a multiple-party exchange. In the end, you wind up with a property you want.    

Like-kind exchanges involving multiple parties are often called “Starker exchanges” after the landmark case approving their use. (Starker, 602 F2d 1341, 9th Cir., 1979) As long as you meet the tax law rules and deadlines for a Starker exchange, you can swap property tax-free.

Here’s the whole story: The tax law definition of like-kind property is a relatively liberal one. It refers to the nature of the prop...(register to read more)

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