Fort Worth 1031 Exchange Lawyer

Tarrant County Real Estate Investment Attorney for Like-Kind Exchanges

Real estate can often be a good investment. A person who owns residential or commercial property can generate ongoing income by leasing the property to tenants. They may also be able to earn profits by selling property that has increased in value. However, when doing so, a person may be required to pay capital gains taxes. To avoid or minimize these taxes, a person may be able to reinvest the money they have earned in a similar property by completing a procedure known as a "1031 like-kind exchange." By doing so, they can defer the capital gains taxes they will be required to pay, allowing their investments to grow until they are ready to fully or partially sell them in the future.

1031 exchanges can be complicated, and real estate investors will need to make sure they follow the correct procedures to avoid any penalties and minimize the taxes they owe. By working with an attorney who understands the applicable tax laws and who can facilitate real estate transactions, investors can protect against financial losses and ensure that they are positioned to earn a good return on their investments in the future. At Gonzalez Law, PLLC, we work with our clients to complete like-kind exchanges of investment properties, and we help them take the correct steps when selling the property they own, designating replacement properties, and closing on the new properties.

Rules for 1031 Exchanges

Section 1031 of the Internal Revenue Code details the laws that apply to like-kind exchanges of investment properties. Under these laws, capital gains taxes may be deferred if the money earned from the sale of one property is reinvested in one or more other properties that have an equal or greater value. Rather than paying capital gains taxes on the property that was sold, these taxes will not need to be paid until the replacement properties are sold in the future. However, there is no limit on the number of 1031 exchanges that a person can perform, so when selling a property in the future, they may complete another exchange and purchase one or more other replacement properties.

In a 1031 exchange, property that is sold must be of "like-kind" to property that is purchased as a replacement, meaning that it is of a similar nature. However, this does not necessarily mean that real estate property sold must be the exact same type of property as any new property that is purchased. Most types of real estate will qualify as like-kind. For example, an apartment building that is sold could potentially be exchanged for a building that will be leased to commercial tenants. Investors will want to consult with an attorney to ensure that the types of property they plan to sell and/or purchase will qualify for like-kind exchanges.

Typically, 1031 exchanges will involve three parties: an investor who sells investment property, a seller who will sell replacement property to the investor, and a qualified intermediary who will facilitate the exchange. The qualified intermediary will receive the proceeds of the sale of the original property, and they will use these funds to buy the replacement property on behalf of the investor. After selling the original property, an investor will have 45 days to designate the replacement property or properties that will be acquired in exchange. The investor must complete the purchase of the replacement property within 180 days after selling the original property. A reverse 1031 exchange may also be completed if an investor purchases replacement property prior to selling their original property.

Contact Our Haltom City 1031 Exchange Attorney

Our firm provides representation for real estate investors, helping them determine the most advantageous ways to sell and purchase property. We can assist with 1031 exchanges and address related issues, such as depreciation or the use of an investment property as a residence. We can also provide guidance on how 1031 exchanges may affect the estate planning process. Contact us and schedule a free consultation today by calling our office at 817-349-7330. We provide legal help with matters related to real estate transactions in Tarrant County, Arlington, Richland Hills, Haltom City, Forest Hill, White Settlement, Dallas, Fort Worth, Saginaw, and Plano.