The Things You Need To Know About 1031 Exchange
Checking with their CPA or accountant is the very first thing that you should do when you are interested in 1031 exchange. The taxes that you will be paying if you will be selling the property outright is the thing that you should determine first. It is the CPA that will determine the adjusted basis of your property. The regular capital gain taxes that you will be paying can now be determined the moment that you will know the basis. The minimum range of the capital gain tax is around 25%.
It is the CPA that will determine the amount of gain which will relate to the natural increase in the value of the property. At around 15% is the normal tax that you would usually get from it. It is the responsibility of the CPA to determine the state capital gain taxes that you will be paying since the state will require you to do so. Selling the property outright or availing the 1031 exchange policy are the options that you will have once you still be able to determine all of the factors involved. It is by using the 1031 exchange that you will be able to get more benefits compared to juts selling the property that you have outright. That us why it is important that you will know all of the information.
The moment that the potential taxes are determined, then it is time to notify the qualified intermediary. You will let them know that you will want to complete the 1031 exchange. It is also necessary that you will have a written purchase agreement between you and the buyer. As part of the 1031, this will mean that you are read y to sell your relinquished property.
The selling of the property that you have can then take pace which is known as the closing. The 1031 exchange can now begin the moment the deed has reached the buyer and the net sales proceed are paid directly to the QI. There will be a start of what they call as day one after the closing has been made. The acquisition of your replacement property is also part of the 180 exchange which will complete the 1031 exchange.
That is why from the start it is very important that you will determine the taxes that you should be paying including the state and local tax. Knowing if you will be able to benefit from the 1-31 exchange can be determined once you will do this process with a CPA. You intent to sell the property and completing the 1031 exchange is what should happen next. After all of these things has been completed then it is necessary that you will inform the QI about it. Before the closing of the sale of the property, you should make sure that all of these things will be accomplished.