1031 Exchange Guide for 2021

If you own an investment property, you may want to understand the set of IRS rules for 1031 exchanges. This is because you may need to pay a significant capital gains tax when you make more off selling an investment property than you paid for it.

A 1031 exchange can be a great tax advantage for real estate investors, allowing you to defer paying taxes on your investment property's sale for virtually as long as you want. This 2021 guide to 1031 exchanges will help you through the process.

If you are a real estate investor, by now you’ve heard about the benefits associated with 1031 real estate exchanges. Although these have gained in popularity, real estate exchanges can be difficult for investors due to the strict guidelines outlined by the IRS.

What to Do With Inherited Property

While a home may be the most generous gift you receive, inheriting a property can be an emotionally fraught process. You are likely inheriting the property after the death of a loved one, and setting foot inside the house may bring on feelings of sorrow and grief. On top of these emotions, you may also be dealing with stressful and confusing financial decisions. Determining what to do with inherited property impacts you and your family. To move forward, you should understand your options, assess the financial consequences of your decision and seek assistance from an expert who can help you navigate the legal and tax requirements associated with inheriting property.

Comparing 1031 vs. 1033 Exchanges

No, that reference you skimmed on a tax-deferred exchange website about 1033 exchanges was not a typo. 1033 exchanges do exist, and they do allow real estate owners to replace one property for another while deferring capital gains taxes. 1033 exchanges, however, are not an alternative to 1031 exchanges and are not an exchange strategy you’ll likely consider including in your investment plans.

Don't settle for paying taxes on your 1031 exchange boot; put your boot to work.