As a company grows and prospers, it may desire to dispose of obsolete real property that no longer serves its needs, and replace it with real property that is better equipped for the changing needs and long-term growth of the company.
If a disposition and subsequent replacement of real property is structured properly, companies can utilize IRC Section 1031 to defer the capital gain or depreciation recapture due from the sale of relinquished property into the purchase of like-kind replacement property.
IRC Section 1031 seems straightforward. Sell relinquished property beginning an exchange, identify replacement property within 45 days, and close on the replacement property within 180 days. However, to successfully structure and complete an exchange of real estate, there are many critical details that need to be considered:
- Replacement Property – Do you know what you are going to purchase in order to replace your Relinquished Property? Are you interested in Triple Net Lease Properties? Are you aware that you can purchase shares of Triple Net Lease Properties, also referred to as Tenants in Common or TIC Properties? Time Value Property Exchange has relationships with some of the largest developers, brokers, and providers of both Triple Net Lease Properties and TIC Properties, and will make introductions to our clients when it is appropriate.
- Timing — Do you have exchange timing issues? Are you buying before selling?
- Other taxes — How do transfer taxes effect the cost of your exchange?
- Value — Are you selling for more than you are buying? Will you make improvements to the replacement property? What are your options to maximize your tax deferral?
- Deposits — How are they held? Are you in constructive receipt of sales proceeds disqualifying you from non-recognition of gain? How should you avoid this?
These are just a few issues that you may face if you are contemplating an exchange of real estate. At Time Value Property Exchange, our trained professionals will lead you by the hand throughout the entire exchange process. Call us at 800-753-6933 for a consultation. |
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