{"id":4261,"date":"2019-05-09T13:43:40","date_gmt":"2019-05-09T17:43:40","guid":{"rendered":"https:\/\/nationalland.com\/blog\/?p=4261"},"modified":"2023-01-26T09:38:56","modified_gmt":"2023-01-26T14:38:56","slug":"1031-exchange-how-does-it-benefit-you-as-a-landowner","status":"publish","type":"post","link":"https:\/\/nationalland.com\/blog\/1031-exchange-how-does-it-benefit-you-as-a-landowner\/","title":{"rendered":"What is a 1031 Exchange?"},"content":{"rendered":"<p><span style=\"color: #000000;\">The situation: You want or need to sell your income-producing land and want or need to purchase another income-producing property, but would prefer not to pay capital gains taxes. A 1031 exchange will allow you to utilize the sale proceeds to exchange and invest in another income-producing property while deferring payment of capital gains taxes.<\/span><\/p>\n<h2><span style=\"color: #000000;\">What is an IRS Section 1031 Tax-Deferred Exchange?<\/span><\/h2>\n<p><span style=\"color: #000000;\">Section 1031 has been in existence since 1921. It is utilized on income-producing property. It allows owners of business and investment properties to <u>defer<\/u> (not tax-free) payment of capital gains taxes by reinvesting proceeds from the sale of a currently owned property (relinquished property) into a like-kind property (replacement property); payment of tax is <u>deferred<\/u> until the property is sold with no reinvestment.<\/span><\/p>\n<p><span style=\"color: #000000;\">As a property owner, when and why would you utilize a 1031 exchange?<\/span><\/p>\n<p><span style=\"color: #000000;\">For income-producing properties, 1031 exchanges are utilized for:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">asset preservation<\/span><\/li>\n<li><span style=\"color: #000000;\">consolidation of diversification of investments<\/span><\/li>\n<li><span style=\"color: #000000;\">relocation of investments<\/span><\/li>\n<li><span style=\"color: #000000;\">greater cash flow<\/span><\/li>\n<li><span style=\"color: #000000;\">appreciation\/leverage<\/span><\/li>\n<li><span style=\"color: #000000;\">to build wealth<\/span><\/li>\n<li><span style=\"color: #000000;\">job creation<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">A survey of REALTORS\u00ae indicated that 63% participated in a like-kind exchange transaction between 2011 and 2015; 40% indicated that transactions would not have occurred in the absence of the tax provision, and 56% said even if the project would have occurred it likely would have been smaller in scale. This survey revealed that REALTORS\u00ae or their clients said the reason they participated in a like-kind exchange, aside from the deferral of capital gains taxes, was for equity to acquire additional properties, estate planning, portfolio diversification, and completion of a development project.\u00a0<\/span><\/p>\n<p><span style=\"color: #000000;\">In 2015, the REALTORS\u00ae Land Institute (RLI), National Association of REALTORS\u00ae (NAR), and several organizations worked to educate legislators why repeal of Section 1031 would have a negative impact on real estate. As I was the RLI president at that time, I represented RLI at the gathering. The group met with 51 legislators, the Ag Committee and Senate Finance Committee.<\/span><\/p>\n<p><span style=\"color: #000000;\">I have written several articles on 1031 exchanges \u2013 feel free to contact me in regard to exchange questions.\u00a0 In addition, the National Association of REALTORS\u00ae \u201cLike-Kind Exchanges: Real Estate Market Perspectives\u201d report can be found at<\/span> <a href=\"http:\/\/www.realtor.org\/reports\/like-kind-exchange-survey\">http:\/\/www.realtor.org\/reports\/like-kind-exchange-survey<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The situation: You want or need to sell your income-producing land and want or need to purchase another income-producing property, but would prefer not to pay capital gains taxes. A 1031 exchange will allow you to utilize the sale proceeds to exchange and invest in another income-producing property while deferring payment of capital gains taxes. &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/nationalland.com\/blog\/1031-exchange-how-does-it-benefit-you-as-a-landowner\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;What is a 1031 Exchange?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":57,"featured_media":4288,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[747,13],"tags":[694],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.7.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is a 1031 Exchange? - National Land Realty News<\/title>\n<meta name=\"description\" content=\"What is a 1031 exchange and how can it benefit you as a landowner? 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