Property sales can be a good way to generate income and build future investments. They can also be traps for unwary investors who do not plan ahead carefully for the capital gains tax that comes when you trade up one property for something better. Your future plans can easily be derailed by an astute IRS agent and a big tax bill next year.
A Baltimore 1031 exchange attorney at Whiteford Tax Defense can give you the help you need to exchange your property legally and defer your capital gains tax payment while getting the property investment you desire. The IRS code allows you to delay your taxes as long as you follow certain rules. Our tax attorneys can help you do that.
A 1031 exchange refers to Internal Revenue Code § 1031. This code section lets an investor or seller delay paying the capital gains tax immediately upon realizing the gain from the sale of property. To do this, the investor and property must follow certain guidelines.
Under a 1031 exchange, capital gains taxes are paid when the new property is sold. A Baltimore lawyer could help you understand the regulations for a 1031 exchange.
There are two critical deadlines you must meet if you want to benefit from a 1031 exchange. This is where a Baltimore 1031 exchange attorney can be of the greatest assistance.
Within 45 days of selling your old property, you must identify potential new properties and submit a list in writing. You must send this list to the qualified intermediary or to another person involved in the sale. Notice to your attorney or the realtor is not enough. The IRS has a maximum number of potential properties you may submit.
Within 180 days of the sale of the old property, the new property must be purchased or received and the exchange complete. The property must be one of the ones on your submitted list. Property descriptions should include the address and legal description of the property. Your attorney can help ensure you have the correct description and meet the other IRS requirements for your 1031 exchange forms.
Paying capital gains taxes on property sales is an unfortunate but essential part of property transfer. At the same time, you may not have the funds at the time of the sale to pay the full tax amount. The IRS tax code allows you to defer your taxes as long as you invest your money in another property, according to their regulations.
At Whiteford Tax Defense, we can give you the assistance you need to sell your property, maximize your investment, and stay on the IRS’s good side. We have the experience our clients need to make sound tax decisions with their property and their investments.
Call us today for an appointment to review your 1031 exchange options. We’re here when you need our assistance.