Things You Need To Know About 1031 Exchange Financing

We all hate paying taxes. But, let's face the truth, we must. The good news is that we can use our money to make more before the government asks for our cut. If you want to invest in real estate you should aim to buy low and then sell high. You could now be subject to massive capital gains taxes. This is where the 1031 exchange funding comes into play.

Section 1031 of IRS Code allows you defer taxes on the money earned from the sale or transfer of an investment property. You can use those gains to buy another property. You must choose a replacement property of equal or greater value than the original. 

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The money you have sold is held in escrow until it is paid to a Qualified Intermediate (QI), a third party who has knowledge of real estate, finance and accounting. Your money is held by the QI until you select your next property. You must act quickly to choose your next property. 

The replacement must be purchased within 180 days. It is important to know everything before you sell your property. This includes where you plan to buy, who your Qualified Intermediate will be, and how you file for a 1031 Exchange. It will help you save time especially if you are trying to find replacement properties quickly. 

Tenant in Common Properties can be properties with multiple owners. Instead of doing a 1031 exchange to another sole proprietorship property the investor can exchange for a larger property and get fractional ownership. Tenant in Common structures make real estate investing easy.