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Section 1031 Exchanges For San Diego Real Estate Investors

When a San Diego Real Estate investor sells San Diego Real Estate, a capital gains tax is recognized, along with a tax on deprecation recapture.

Author: Don Sluhocki
Date: Aug 14, 2011 - 12:00:15 AM

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When a San Diego Real Estate investor sells San Diego Real Estate, a capital gains tax is recognized, along with a tax on deprecation recapture. The regular capital gains tax, deprecation recapture, and any applicable state tax could often outcome in a tax liability in the 20% to 25% variety for the sale of San Diego Real Estate. (If the San Diego Real Estate has been held for less than 12 months, all of the gain will be taxed at a great deal higher short term capital gains rates.)

A Section 1031 exchange, named for the applicable section of the Internal revenue Code (also known as a Starker Exchange, Tax Free Exchange, or Like-Kind exchange), allows an investor to defer all tax on the sale of San Diego Real Estate if the San Diego Real Estate is replaced with other San Diego Real Estate pursuant to a detailed set of principles.

The replacement property must be identified within 45 days of the sale of the relinquished home. (1) The replacement home must be purchased within 180 days of the sale of the relinquished house. (2) The replacement house must have a purchase cost at least as wonderful as the relinquished dwelling, otherwise some tax will be recognized. (3) All of the cash proceeds from the sale of the relinquished property, less any debt repayment and costs of the sale, must be reinvested in the replacement property. (4) All of the cash proceeds from the sale of the relinquished dwelling must be held by a accredited Intermediary, which is anyone or institution with whom the investor has not recently conducted other business. The investor must not have any access to the cash while it is being held. (5) The titleholder of the relinquished dwelling must be the identical as the purchaser of the replacement dwelling. (6) The sale or purchase of a partnership interest does not qualify for a Section 1031 exchange, except under a few limited set of circumstances. (7) The relinquished dwelling cannot have been classified as inventory, such as condominiums built by the investor, or lots in a subdivision which was subdivided by the investor.

If these principles are followed, San Diego Real Estate investors could sell current San Diego Real Estate holdings and replace them with other properties. A Section 1031 transaction is an excellent way for a retiring San Diego Real Estate investor to convert actively managed buildings into passive premises, such as triple net leased properties.

All in all, there is no greater, safer and easier way to search for a house or to sell one than on the web as the internet has a lot to offer in the San Diego Real Estate marketplace and it is swiftly developing online. The on the net segment of the industry is growing more and more every day and thus improving your chances for a profitable invest in/sell. In case you need more suggestions you should contact San Diego realtors to assist you in the procedure.

All in all, there is no greater, safer and easier way to search for a house or to sell one than on the web as the internet has a lot to offer in the San Diego Real Estate marketplace and it is swiftly developing online. The on the net segment of the industry is growing more and more every day and thus improving your chances for a profitable invest in/sell. In case you need more suggestions you should contact San Diego realtors to assist you in the procedure.

View all articles by Don Sluhocki

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