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What is a 1031 Exchange?
(Source:
Realty Exchangers, Inc. For more information,
click here)
In the summer of 1990, the I.R.S. finally came out with the long awaited
rules on Deferred Exchanges. Section 1.1031 of the Internal Revenue Code
laid out in detail the procedure for turning a sale and purchase type
transaction into an exchange.
These new rules allowed owners of certain types of like kind Real and
Personal property to sell their property and buy other like kind property
without paying the Capital Gains Tax.
The like kind provision for Real property is quite broad, and includes Land,
Rental, and Business property. Any of which, can be exchanged for the other.
The like kind provision for Personal property is more restrictive.
This type of property must be in productive use in a business (depreciable
property), and can only be exchanged for the same type of property.
As an example a business aircraft for a business aircraft (a fixed wing
airplane for a helicopter will work), or a commercial truck for a commercial
truck, etc.
The rule also required that the "Exchanger" use a safe harbor to hold the
proceeds while the exchange was in progress, and spelled out what those safe
harbors were.
The only practical safe harbor for most "Exchangers" is a "Qualified
Intermediary."
Realty Exchangers, Inc., is a qualified intermediary, and is set up to
assist you in making a smooth and easy exchange.
The rules also required certain time limits and other requirements, all of
which are described in our free Procedure Manual, which you can download
from this site.
If you have trouble downloading this information, or if you have questions
after reading it, please call us at 1-360-695-8258.
Paige Peugh
mobile phone 706.633.9969
toll free (800) 307 0777
ask for extension 239
e-mail
paige@ellijay.com
Coldwell Banker
High Country Realty
Blue Ridge, Georgia
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