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1031 Exchanges

The Internal Revenue Code Section 1031 provides investors with one of the last available tax shelters by allowing them to avoid paying any taxes when an investment property is exchanged. Section 1031 provides for an exception to the general rule by providing that gain or loss will not be recognized on the exchange of business or investment property if it is exchanged for link-kind. These exchanges are sometimes referred to as "like-kind exchanges". The gain is not forgiven but simply rolled into the new property and may be recognized later when a typical sale takes place.

How could a 1031 Exchange benefit me?

A 1031 Exchange is a great vehicle to help you increase the cash flow from your investment. For example, you could use it to transfer your investment from non-productive bare land to commercial property. Deferring the payment of tax can result in the building of a great amount of personal wealth. Depending upon how your personal estate and how it is set up, it is possible that upon your death the accumulated profits from 1031 exchanges will go completely untaxed and your heirs could immediately sell the property tax free.

What property qualifies for a 1031 Exchange?

To qualify for a 1031 Exchange, a property must be held for investment or used in a trade or business. For example: investment property is generally bare land; trade or business property is rental property or property used in your business. Vacation homes generally do not qualify unless there is substantial rental activity. Property that does not qualify can generally be made to qualify.

Is Southern Exchange Services LTD a Qualified Intermediary?

Yes. A Qualified Intermediary (QI) is generally required by the IRS during the exchange process. They are the entity who will be holding your money during the 1031 Exchange process. Sometime called Facilitators, their role is critical to your exchange because a mistake at this point could result in your exchange being disallowed by the IRS, or worse - your money disappearing. Southern Exchange Services LTD, has been properly handling 1031 Exchanges since 1996.