If you invest in real estate then you might be aware of a little tax-friendly trick known as a like-kind exchange. This tax-saving tip can save real estate investors a lot of money every time they sell a property. Under normal circumstances if you sell a property and make a gain you have to pay taxes on the gain, even if you use the money to purchase another property.
However, if you sell one property and use the proceeds to acquire another property, under Section 1031 of the IRS Code, then you can delay the tax bill by using a like-kind exchange. This has been a priceless move for thousands of real estate investors for many years. That’s the good news.
If you invest in real estate and are looking to replace one or more properties with different properties then now is a good time to meet with a professional tax advisor that can help you with this process. You will learn whether or not your properties qualify for this tax break and how you can get the most out of a like-kind exchange.