1031 Exchanges: Explained
A 1031 exchange, named after Section 1031 of the IRS Code, and also known as a Starker Exchange, allows you to potentially eliminate paying capital gains taxes on the sale of an investment property by reinvesting the profits into a “like-kind” property. With F Street, we can help you find assets to leverage your gains for targeted future returns without facing an immediate tax bill. To qualify, you must identify a replacement property within 45 days and complete the exchange within 180 days, making it a powerful strategy for continued growth and portfolio diversification.
Tailored 1031 Solutions
If you have a 1031 opportunity, we would love to have a preliminary discussion about what you’re looking to accomplish with the sale of your property. Our team is committed to understanding your unique goals and tailoring potential 1031 solutions to meet them.
- Passive Cash Flow: Generate steady income without the hassles of property management.
- Long-Term Appreciation: Invest in assets with potential for significant value growth over time.
- Alternative Investment Strategies: Diversify your portfolio with unique opportunities that align with your financial objectives.
Why Partner with F Street
Our team has significant deal flow, allowing us to present you with real investment opportunities that make the most sense for your situation. With our expertise and dedication, we ensure terms and returns that align with your financial goals.
Key Considerations for 1031 Exchanges
- Timeline Constraints
- We need this information to ensure we meet the 45-day identification window for your 1031 exchange and the 180-day placement period.
- Like-Kind Property Requirement
- We require details about your current property to ensure it meets the like-kind exchange requirements and to tailor potential replacement properties to your investment goals.
- Qualified Intermediary
- You cannot take possession of the proceeds from the sale of your property. A qualified intermediary must hold the funds and facilitate the exchange to comply with IRS regulations.
- Equal or Greater Value
- To fully defer capital gains tax, the replacement property must be of equal or greater value than the property being sold. Any cash or debt relief received may be taxable.
- Holding Period
- The IRS does not specify a minimum holding period for the properties involved in a 1031 exchange, but it is generally recommended to hold each property for at least one year to avoid questions about the intent to hold for investment purposes.