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People also ask
What is a 1031 exchange and how does it work?
Basically, a 1031 exchange allows you to avoid paying capital gains tax when you sell an investment real estate property if you reinvest your profits into another similar property within a certain period of time. So let say you bought a real estate property five years ago.
Can I Sell my investment property without 1031 exchange?
It actually possible to sell an investment property and satisfy the 1031 exchange rules without using all of your sale proceeds. This is called a partial exchange. However, buying a replacement for a lower cost than the original property sale price or taking out less financing will result in taxes.
Can I do a 1031 exchange on a beach house?
Example: You stop using your beach house, rent it out for six months or a year, and then exchange it for another property. If you get a tenant and conduct yourself in a businesslike way, you’ve probably converted the house to an investment property, which should make your 1031 exchange alright.
How often can you do a 1031 tax swap?
There’s no limit on how frequently you can do a 1031. You can roll over the gain from one piece of investment real estate to another and another, and another. Although you may have a profit on each swap, you avoid paying tax until you sell for cash many years later.