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Don’t sell real estate, swap it

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in Small Business Tax,Small Business Tax Deduction Strategies

If you bought real estate years ago that has appreciated in value, you could be sitting on a king-size taxable gain when you finally sell the castle. Fortunately, there’s a way you might postpone the taxable gain until a time when you will pay a lower tax rate—or perhaps forever!

Strategy: Arrange for a tax-deferred “like-kind” exchange under Sec­­tion 1031 of the Internal Revenue Code. Assuming you meet the tax law requirements, no tax is due until you sell the replacement property (the property you acquire in the like-kind exchange).

To top things off for high-income taxpayers, arranging for a deferred gain under the like-kind exchange rules may allow you to avoid or minimize the new 20% maximum federal tax rate on long-term gains and the new 3.8% Medicare surtax on investment income. However, you must pay strict attention to the tax law deadlines (see box below).  

Here’s the whole story: Under Section 1031 of the tax cod...(register to read more)

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