Sep 29, 2023
Maxwell Finch
Welcome to Castling Tax, your trusted 1031 intermediary. We're here to help you navigate the complex world of real estate tax benefits, specifically focusing on Boston's 1031 Exchange framework.
What is a 1031 Exchange?
A 1031 Exchange, also known as a like-kind exchange or Starker, is a powerful tax-deferral strategy used by savvy real estate investors. It allows an investor to sell a property, reinvest the proceeds in a new property, and defer all capital gain taxes. The name comes from Section 1031 of the U.S. Internal Revenue Code, which allows this kind of exchange.
How Does a 1031 Exchange Work in Boston?
While the general principles of a 1031 exchange apply nationwide, there are unique aspects to consider when executing an exchange in Boston. The city's robust real estate market and specific state laws can influence the process and potential benefits.
Choosing a Qualified Intermediary
A crucial step in a 1031 exchange is selecting a Qualified Intermediary (QI). The QI holds the proceeds from the sale of the old property and uses them to buy the new one. They also prepare the legal documents required for the exchange. At Castling Tax, we have extensive experience serving as a QI in Boston's real estate market.
Identifying Replacement Property
After selling your old property, you have 45 days to identify potential replacement properties. The replacement property must be of like-kind, but that term is broad and can include any type of real estate held for investment or business use.
Completing the Exchange
You have 180 days from the sale of your old property to close on the new one. If all rules are followed, you can defer capital gain taxes.
Benefits of a 1031 Exchange
There are numerous benefits to executing a 1031 exchange. The most obvious is the deferral of capital gain taxes, allowing you to reinvest more money into your next property. Plus, there's no limit on how many times you can do a 1031 exchange. So you can continue to grow your investment, tax-deferred, for as long as you like.
Start Your 1031 Exchange Journey with Castling Tax
Whether you're new to 1031 exchanges or an experienced investor, Castling Tax is here to help. We offer a free 1031 exchange capital gains calculator to help you estimate potential tax savings.
Ready to start your 1031 exchange journey? Contact us today to learn more about how we can help you maximize your real estate investments in Boston.