When you sell an appreciated asset, such as investment or rental property, you can be sure the IRS wants to take their share of your proceeds. The applicable capital gains tax can take a large percentage of your monetary gain on the property, leaving you with significantly less to put toward a new real estate investment. Fortunately, the Internal Revenue Code Section 1031 allows for a like-kind real estate exchange that helps you avoid the capital gains tax, commonly called a “1031 exchange.” At the law firm of Randick O’Dea & Tooliatos, LLP, we regularly help clients with successful 1031 exchanges in California.
1031 Exchange Overview
If you sell one property, you can then use the proceeds to invest in another property without being taxed, so long as the properties are “like-kind.” This means that both the sold and purchased real estate must be used for investment purposes or held for productive use in business. Some examples of like-kind investment real estate include:
- Commercial buildings
- Apartment buildings, condo complexes, or duplexes
- Unimproved land zoned for commercial development
- Rental homes
- Office buildings
We can help with each stage of a 1031 exchange, including:
- Identifying the appropriate and qualifying property to be purchased within 45 days of a sale
- Facilitating the purchase of the new property within 180 days of the sale
- Ensuring the replacement property is of equal or greater value than the sold property
If you do not ensure you meet all the requirements of a 1031 exchange, you face unexpected and substantial tax liability.
Contact Our Pleasanton Real Estate Lawyers for a Consultation
If you are considering the sale of an investment property, please contact Randick O’Dea & Tooliatos, LLP, to discuss tax implications and the possibility of a 1031 exchange. Call our office at 925.460.3700 or contact us online today.