San Diego commericial real estate
Sunday, November 22nd, 2009 | Always Online
For commercial properties, there is no better place than in the San Diego Area. Contact a San Diego commericial brokers who can guide you toward more profits taking advantage of the 1031 exchange.
The name of the code; 1031 Exchange, comes from the Internal Revenue Code Section # 1.103) is a code that can end up saving individuals money on certain business and investment property transactions. ‘Profit or Capital Gain’ taxes must be paid on personal property and real estate if any profits were made. However there might be an exception.
The 1031 Exchange allows sellers of some real estate and personal property to be exempt from paying the profit taxes if they are “exchanging” the property they sell, for a new property of “like-kind”. The code only applies to investment property and business property.
Imagine selling a property which had been used as an office, and then buying a similar property to be used for the same purpose.The profits made on the sale will not be taxed. The new property does not have to be the same size as long as it is going to be used for the same purpose as the one sold.Remember that property purchased for investment purposes can be sold to buy a different property for investment purposes, without taxing the profit. The broad definition of exchanging for a “like-kind” property allows for much flexibility.
Many times, there are time factors to be considered. The new property must be purchased within 180 calendar days of the sale of the original property.Many buyers can find it more efficient to make the sale and purchase as close in time as possible. The 1031 code requires a qualified intermediary after 45 days of the sale to ensure that the gains are used towards the purchase of the new property. Sometimes this will prevent many individuals from using the profit for their financial gain.