What Are You Selling?
Questions to Consider
Is the property a primary residence or an investment?
Are you going to reinvest the sale proceeds into other real estate?
Do you know whether taxes are due on the sale of your property?
Are you holding your property primarily for resale? (Dealer Property is not eligible for exchange)
This chart shows the basic differences between selling a primary residence (IRC 121) and exchanging investment property (IRC 1031).
Section 121 allows an individual to sell his residence and receive a tax exemption on $250,000 of the gain. A married couple receives an exemption of $500,000 on the gain. Section 121 may only be applied to a residential home sale once every two years.
Section 1031 applies to the transfer of investment or business property and allows an investor to defer the payment of capital gains tax. When exchanging, an exchange facilitator is used. The exchange facilitator will make sure the process runs smoothly by coordinating with the escrow company, creating the “Exchange and Assignment Agreements,” and informing the client and their agent of any time requirements.
If an investor exchanges into a property that is later converted to a primary residence, it is necessary to hold the property for no less than five years or the sale will be fully taxable.
The Equity Advantage Incorporated & IRA Advantage YouTube Channels
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Head to our channels and watch as owner of Equity Advantage and IRA Advantage, David Moore speaks on the basics of 1031 Exchanges and Self-Directed IRA’s in today’s market, including What Is An Exchange, What Can Be Exchanged, How Are Self-Directed IRA’s created, and more!
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The Guys With All The Answers…
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
Whether working through a 1031 Exchange with Equity Advantage, acquiring real estate with an IRA through IRA Advantage or listing investment property through our Post 1031 property listing site we are here to help Investors get where they want to be. About Us…