Frequently Asked Questions
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Often investors do not realize taxation on a personal residence is far different than taxation on an income or investment property. Under Internal Revenue Code §121, homeowners are allowed to exclude up to $250,000 of capital gains if single, $500,000 if married, upon the sale of a principle residence provided they have owned and occupied it two of the previous five years.
If an investor sells property they pay tax. Taxes are paid on capital gain, not equity or profit. However, property that qualifies for preferential treatment under Internal Revenue Code §1031 is treated quite differently.
The benefits of exchanging include using leverage to maximize your investment dollars to property diversification to allow you the widest range of investment freedom. 1031 Tax Deferral can range anywhere from a simple swap of two properties to a complex, multi-leg, multi-property transaction involving a delayed, reverse or construction exchange. The investment strategy and the nature of the transaction will decide which exchange best suits your needs.
Imagine selling rental property or land, acquiring new real estate of any type and not paying one dime in capital gain taxes. Thousands of investors are profiting every day simply by using the tax deferred sale IRC §1031!