What is a 1031 Exchange?

by Admin on January 11, 2011

I recently attended a presentation at my Keller Williams La Jolla office on 1031 exchanges led by the “qualified intermediary” 1031 Exchange company IPX (Investment Property Exchange Services, Inc) featuring Mr. Stephen D. Decker. A 1031 Exchange is part of the U.S. Internal Revenue Tax code that states: “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for the investment if such a property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.” How may the 1031 Exchange benefit my clients? According to Stephen Decker, “1031 exchanges provide investors with one of the best tax strategies for preserving the value of an investment portfolio. By using an exchange the investor is able to defer the recognition of capital gain taxes that would otherwise be incurred on the sale of investment property. The investor can then use the entire amount of the equity to purchase substantially more replacement property. To qualify as an exchange the relinquished and replacement properties must be qualified ‘like-kind’ properties and the transaction must be structured as an exchange. “ Why use a qualified intermediary for your 1031 Exchange? A company such as IPX “will provide the investor with the necessary reciprocal transfer of properties to create the exchange and the ‘safe harbor’ protection against actual and constructive receipt of the exchange funds as required by Internal Revenue Code 1031.” Disclaimer: I do not receive any compensation for referring clients to IPX. This is not permitted by the California Department of Real Estate and violates the ethical code of the National Association of REALTORS. Due to their solid reputation, I recommend IPX as a preferred vendor for my clients that are interested in a 1031 Exchange. If you would like more information on IPX or 1031 Exchanges, please email me at rob.handley@atlasinternational.com , or call my office line at 619-567-5050. Feel free to leave any comments or suggestions in the spaces below. J. Rob Handley

Leave a Comment

Previous post:

Next post: