Investments properties can either be a rental property or something that is sold to another buyer, now if you want to sell your investment property to re-invest then a smart move would be to go for 1031 exchanges. What you need to know about starker exchange or 1031 exchanges is that it is a part of the IRS code wherein one is allowed to sell their investment property to invest in another property using the gained profit. Take note that everything that you gained from the sale must be invested into another property. It doesn’t matter if you invest the amount in several properties so long as the full amount gained is re-invested in other properties. Before the sale can be completed, there will be a company that will act as the one that will keep all the funds until a “like-property” is found.
The time it takes for you to decide on which properties to purchase using the profit of the investment property you are selling is 45 days. There are certain things included in this process so as no one will take advantage of the entire situation. The 95% Exception rule is included in these safety measures or approach. This is called 95% rule since the seller of the investment property must get 95% of what the property they intend to purchase. You have six months to close those identified properties you have, this will be done right after you have close the investment property you are selling.
You can almost use any type of property for 1031 exchange except those properties that serve as the primary residential home of the subscriber. The use of 1031 exchange is a good kick off for those who are first-timers in the investment market. If you want to know more about these 1031 exchange guidelines along with the 1031 investment properties then the best thing to do is visit the IRS web page. There is also a list of intermediate companies that shall hold the funds of the investors along with accurate information about this exchange.
It is vital to know how advantageous these 1031 exchanges are rather than settling with the buy and sell of properties. The things mentioned earlier are just the basic things that you need to know about these exchanges.
Most real investors make use of their money in other things or they usually keep it for future usage. The primary difference of acquiring properties through 1031 exchange and the conventional ones is that you can acquire properties without worrying about the tax. This is really something beneficial on your part since the IRS will not bother you as you go on with the selling procedures.