How a 1031 Exchange Works & The Perfect Property in Broken Arrow to Use With It.
By Rescue Team Realty
(Rescue Team Realty)
A section 1031 tax deferral allows an investor to sell a property, then reinvest the proceeds in a new property and defer all capital gain taxes. Specific conditions for the exchange state that it must be of ìlike-kind and must take place within 45 days of the close of the sale. To understand more about how this exchange works, consider the following example: If an investor has a $200,000 capital gain and incurs a tax liability of $70,000 in combined taxes when the property is sold, only $130,000 remains to reinvest in another property. If the investor had, for example, a down payment of 25% and a loan-to-value ratio of 75%, the seller would only be able to purchase a $520,000 property. If the same investor chose a 1031 exchange, however, and had the same down payment and loan-to-val...
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