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1031 Tax Exchanges And Real Estate
By: David E. Williams

If you have money invested in property, you should look very carefully into the 1031 exchange rules. You could see a significant reduction in your tax bill and avoid any difficulties in utilizing <a href="http://www.investing-secrets.com/1031-exchange/" target="_blank">1031 exchanges</a>. If you expend a bit of time and effort on checking these out, you can really make the most of your tax deferrals.

Deadlines are perhaps the most vital aspect to learning about 1031 exchange rules. You are obligated to purchase your replacement property only one hundred and eighty days following the transaction has been filed, or prior to the next filing cutoff. There is, however, a forty-five day identification time during which one can use one of three methods in order to identify which properties are under consideration for an exchange.

The 1031 exchange rules require that you not use any profits from the sale for anything unrelated to the exchange. These expenses should be an addendum to the settlement with a check for such being written to the buyer at settlement. For your best tax deferral you need to spend all of the cash from the sale of your property in the newly purchased property.

If you happen to reside in a different state from where the property is, be aware that some states mandate that your closing agent or real estate agent is legally obliged to hold back a percentage of your sale price in order to ensure that the state gets any tax revenues that it is due, given that hunting down such non-residents at a later date becomes increasingly difficult.

The real property tax act of 1980 requires that foreigners withhold ten percent of the sales price for this reason. Some states will waive this requirement that it why it is very important to know your state's stand on this issue.

You must use a qualified intermediary who completes all the necessary paperwork and filing and must adhere to the 1031 exchange rules. There are many places on the internet where you can find 1031 exchange information and you can even find qualified intermediaries in your state.

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If you are a <a href="http://www.investing-secrets.com/" target="_blank">real estate investor</a> it is in your interest to do your homework on 1031 exchange rules. It could save you many thousands of dollars in taxes, and could help you avoid many of the pitfalls and problems associated with <a href="http://www.investing-secrets.com/1031-exchange/" target="_blank">1031 exchanges</a>. By doing a little research you can maximize and optimize your tax deferrals. You are obligated to purchase your replacement property only one hundred and eighty days following the transaction has been filed, or prior to the next filing cutoff. You can easily get <a href="http://www.investing-secrets.com/1031-exchange/" target="_blank">1031 tax exchange</a> information online and locate the nearest competent intermediaries.

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