Information That Matters 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 adjusted basis of the property that you have that will be determined by the CPA. The moment that you will be able to determine the basis, then you will also know the regular capital gain taxes that you will be pang. The capital taxes that you would get would be normally 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. The normal tax that you would usually get from it is around 15%. 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. Comparing to selling the property outright, you will be able to get ore advantage when you use the 1031 exchange. Knowing all of the information will greatly help you.
After all of the possible taxes are determined, then you have to make sure that you will notify the qualified intermediary. Informing them that you would want to complete the 1031 exchange is the next thing that you should do. A written purchase agreement will also be needed 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. By the time that the deed has reached the buyer and the net sales has been paid directly it the QI, then the 1031 exchange will now begin. There will be a start of what they call as day one after the closing has been made. This is also the start of the 180 exchange period which you will need to complete the 1031 exchange .and will acquire your replacement property.
The state and the local tax are the taxes that you should be able to determine from the start. It is by doing this process with a CPA that you will know if you will be able to benefit from the 1-31 exchange. It is then important that you will show your intent to sell your property as well completing the 1031 exchange. After all of these things has been completed then it is necessary that you will inform the QI about it. It is important that all of these things will be accomplished before the closing of the sale of the property.