1031 news

Tax Relief for Victims of Hurricane Florence

In the event of a federally-declared disaster, the IRS will provide relief to taxpayers in the form of extensions on the 180-day exchange period and 45-day identification period rules. Notice of such relief is posted on this IRS web page:

Tax Relief in Disaster Situations

Selecting the Entity for a Real Estate Purchase – Part 1

In this series of blogs, I provide a brief overview of the most common forms and business entities available under state law for purposes of owning real estate. These summaries do not seek to account for every similarity or difference between forms and business entities, but rather focus on what will probably be the most salient factors when comparing one entity against another.

Accruit Expands 1031 Exchange Capabilities and Technology Footprint

DENVER, CO – Accruit, a financial technology company and leader in the 1031 like-kind exchange industry, has acquired Montana-based American Equity Exchange, founded in 1991 by 1031 veteran, Max A. Hansen. Hansen will join Accruit as an Executive Vice President and continue serving exchange clients from his Montana location.

Misconceptions about 1031 Like-Kind Exchanges

1031 tax-deferred exchanges were established as part of United States tax law in 1921, yet there are still misconceptions about like-kind exchanges and how they work. Let's clear up a few in this post.

Accruit Again Transforms 1031 Exchange Industry with Major Release of Exchange Manager

DENVER, CO – Accruit, a financial technology company specializing in escrow and 1031 exchange services, today announced the general availability of its fifth major release of its Exchange Manager application that makes tax-deferred exchanges of real estate safe, secure and simple for both clients and advisors. With this unique app, investors and advisors can more easily participate in 1031 exchange transactions that provide increased cash flow of up to 40 percent of asset sales.

Real Estate Transaction Basics

A real estate transaction can be a perplexing process no matter if it’s large or small. The precise procedures and professionals pushing paper appear puzzling regardless of whether the transaction qualifies for a tax- deferred exchange under Section 1031. While there are many legal and financial aspects that revolve around the purchase and sale of real estate, the closing of a real estate transaction should not be an adversarial process. No useful reason exists to think of or treat a closing like litigation although it does happen. Everyone involved needs to work together in a cooperative way to consummate the deal. Real estate law is a function of locality and custom in many respects; however, we will generally review some commonalities in the closing of a real estate transaction.

1031 Tax-Deferred Exchanges as an Important Estate Planning Tool

There are many factors which motivate taxpayers to complete tax-deferred exchanges when selling real estate. Such considerations can include:
  • Consolidate many properties into fewer properties
  • Diversify fewer properties into more
  • Trade appreciated low cash flow property for high cash flow property
  • Maximize ability to borrow against properties using bank funds rather than owner’s
  • Trade for higher basis property to take advantage of depreciation deduction
  • Acquire property closer to owner in the event of relocation

Infographic: Requirements for Identification of Replacement Property in a 1031 Exchange

The ability to defer taxes through a 1031 like-kind exchange is a valuable taxpayer benefit, but to receive this benefit, the rules pertaining to identification and acquisition of replacement property must be strictly adhered to or the exchange will fail.

What are the effects of tax reform on 1031 tax-deferred exchanges?

Tax deferral afforded through Section 1031 like-kind exchanges has been under threat of repeal or being reduction for many years. A committee made up members from the Senate Finance Committee and the House Way and Means Committee known as The Joint Committee on Taxation have made such recommendations many time over the past few decades. Cutbacks to Section 1031 had been recommended as far back as President Clinton’s administration. In 1997, that administration suggested requiring exchanges to be limited to “same-kind” properties rather than like-kind (any kind of real estate is like-kind to any other type of real estate). It came as no surprise that the recent House and Senate proposals for tax reform chose to whittle down Section 1031 in order to raise tax revenues to offset some of the tax reductions contained in the reform plans.

1031 Exchanges + Tax Reform = Permanent Tax Reduction

Comprehensive tax reform is here, and Congress is moving the legislative text through its final stages. Final voting is expected before the end of the year, with the new legislation to become effective for 2018. With Section 1031 retained for investment and business use real estate, but repealed for personal property (equipment, autos, machinery, etc), the new legislation presents a unique opportunity for exchangers to permanently reduce tax liabilities. There’s a very short window. If the new tax legislation passes, Section 1031 exchanges of personal property will only be allowed on sales that occur through December 31, 2017.

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