1031 Exchanges and Related Parties
The section 1031(f) related party guidelines were intended to prevent taxpayers from using 1031 exchanges to shift their tax cost basis between properties owned by related parties. You may not sell a property to, or buy a property from, a related party if your motive is tax avoidance. For example, lacking restrictions, a taxpayer with […]
“Tax Straddles” – Navigating the Complexities of an Exchange Spanning Two Tax Years
October 8, 2024 By: James T. Walther, Esq., LL.M., General Counsel When a taxpayer initiates a 1031 exchange near the end of their tax year, it often extends into the following year, creating a situation known as a “tax straddle.” This term refers to the scenario where the sale of the relinquished property and the […]
1031 Exchanges: FIRPTA Made Simple
This document is interactive, please utilize the hyperlinks below which will redirect you to specific IRS.gov webpages for guidance. This article is strictly informational. For inquiries regarding the same, please contact the Internal Revenue Service directly. The Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) income tax withholding has become more commonplace as […]
Balancing the Exchange
REINVESTING IN REPLACEMENT PROPERTY EQUITY AND DEBT REQUIREMENTS AKA “BALANCING THE EXCHANGE” In general, an I.R.C. §1031 Exchange (“Exchange”) allows owners of business or investment real estate to defer the recognition of all or most of the capital gains taxes and depreciation recapture normally due upon the sale of the property, so long as they […]
Closing Costs
What Costs Can Be Considered Acceptable “Exchange Expenses?” A frequently asked question is “What expenses can be deducted from the exchange 1031 properties proceeds without resulting in a tax consequence?” Although the IRS has not published a complete list of qualifying expenses, there are some rulings that provide general parameters. Brokerage commissions can be deducted […]