Facts About 1031 Exchange
It is when you are interested in 1031 exchange that you will need to check in with their CPA or accountant first. It is very important that you will now first how much money will be involved in paying the taxes if you sold the property outright. It is the CPA that will determine the adjusted basis of your property. It is by knowing the basis that you will know the regular capital gain taxes that you will be paying. It is around 25% that the capital gain taxes would be.
It is the CPA that will be able to determine the normal increase in the value of the property. At around 15% is the normal tax that you would usually get from it. It is the responsibility of the CPA to determine the state capital gain taxes that you will be paying since the state will require you to do so. The moment that you will be able to know all of the factors involved then things now time to decide of you will sell the property outright or just defer the taxes by making use of the 1031 exchange. Comparing to selling the property outright, you will be able to get ore advantage when you use the 1031 exchange. That us why it is important that you will know all of the information.
After all of the possible taxes are determined, then you have to make sure that you will notify the qualified intermediary. You will let them know that you will want to complete the 1031 exchange. A written purchase agreement will also be needed between you and the buyer. Selling your relinquished property as part of the 1031 will be the meaning of all of these actions.
It is the closing that will mean the selling if the property that you have. By the time that the deed has reached the buyer and the net sales has been paid directly it the QI, then the 1031 exchange will now begin. The day one happens after the day of the closing has been made. The 1031 exchange will be complete after the 180 exchange has been made and this involves the exchange if your replacement property.
That is why from the start it is very important that you will determine the taxes that you should be paying including the state and local tax. It is by doing this process with a CPA that you will know if you will be able to benefit from the 1-31 exchange. Showing your intent to sell your property and completing the 1031 exchange should be done by you. After all of these things has been completed then it is necessary that you will inform the QI about it. It is important that all of these things will be accomplished before the closing of the sale of the property.
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