It is very common for investors in the state of Florida to seek to lower their capital gains taxes. Of course, these people are also concerned with doing so legally.
The 1031 tax-deferred exchange is a great opportunity for investors in the state of Florida. It helps investors to avoid paying taxes on newly sold property if they reinvest the profits into another property. This helps investors to save a significant amount on capital gains taxes while encouraging a healthy property market.
Who qualifies for a 1031 tax-deferred exchange?
In order to benefit from the 1031 tax-deferred exchange, you must use the money acquired from the sale to successfully exchange with another property within 180 days. The exchanger must identify potential property acquisitions within 45 days of selling their property, and these potential properties should be valued at equal or a higher value than the property sold.
In addition, the property being bought must have commercial purposes. In other words, it cannot be used as a residential home. It should instead be a business property or a residence that will be rented for profit.
The exchanger also needs to acquire like-kind real estate in order to qualify for a 1031 tax-deferred exchange. This means that the property being sold, and the property being bought, needs to be similar in the sense that it is being held for commercial use.
If you are a property investor and want to benefit from a 1031 tax-deferred exchange, it is important that you understand all conditions so that you know how the law will be applied to you.