The 1031 Exchange Explained
Why is the 1031 tax deferred exchange important to a real estate property investor?
An investor in real estate understands how important it is to preserve wealth and assets. In the frequently changing world of taxation, the investor is fortunate to have IRC Section 1031. This tax code allows the investor to exchange from one investment property to antother and defer taxes on the gain. This means that a 1031 Exchange is a rollover of equity of like properties, rather than an avoidance of tax. Thus the investor continues to build wealth through real estate investment, an maintains the hard earned equity. Any tax liability through inheritance will be limited to the gains from the date of the inheritor's acquistion, not during the years of ownership. So in essence the taxes that are saved now are never paid.
Always get advice from a CPA or Tax Attorney.
Primary Residence Exemption
Many people thing they must be 55 years old to get their 1 time exemption on their primary residence. The following is information on the current PRIMARY RESIDENCE EXEMPTION
* $250,000 for an indiviual or $500,000 for a couple filing jointly, if you have lived there for 2 years.
* On an investment property, it must have been your priomary residence for 2 out of the last 5 years to claim a primary residence exemtpion.
* Primary residence exemption may be taken every 2 years.
This information is given as courtesy-please call your accountant or CPA to review your indidvidual eligibility.