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Avoid tax on like-kind exchanges of property

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in Small Business Tax,Small Business Tax Deduction Strategies

If you’re a serious real estate investor, you may be gearing up to unload appreciated property so you can snap up other property with stronger growth potential. Boy, do we have a tax deal for you!

With proper planning, you can effectively sell a property and reinvest the proceeds without giving Uncle Sam his usual cut. All you have to do is a like-kind exchange that meets tax-law requirements.

How to swap real estate tax-free

Under Section 1031 of the tax code, you’re allowed to swap like-kind investment properties free of tax. Over the past few years, the IRS has approved several ingenious ways to pull off tax-free swaps.

Here’s the whole story: Section 1031 allows you to defer your taxable gains when exchanging properties similar in nature, except to the extent that you receive cash or other “boot” as part of the transaction. In that case, you must pay current tax on your gain up to the amount of boot that you receive. Oth...(register to read more)

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