If you’re a real estate investor, the 1031 exchange—which gets its name from Section 1031 of the U.S. Internal Revenue Code—is your best friend!

 

Why? Because for about 100 years, the 1031 exchange has allowed real estate investors the chance to reinvest the profits from the sale of a property without having to pay capital gains tax. As long as you replace one investment property with another and follow all the rules set by Uncle Sam (we’ll get to all of those in a minute), you can keep kicking that tax bill down the road. Sound complicated? It can be.

 

In any 1031 Exchange, the players differ from those in a traditional transaction. So are the terms associated. As an investor you will want to employ your tax consultant, an accommodator, and your real estate team. You will also want to be thinking about where you will be re-investing your money to take advantage of the beautiful tax deferral that is the main driver of this type of transaction. The sale works virtually the same, but once you have an escrow, you will be able to define your 'Boot' figure, which will determine how much you purchase your next property or properties from the proceeds of your current asset. Other important factors in a 1031 exchange are timeframes and selecting your accommodator. The All Montana Team can help you plan for a successful transaction.

 

Reach out to discuss your specific property and what you are hoping to accomplish in an exchange of property. All Montana Team has relationships with professional and nationally accredited exchange accommodators ready to step in with the specialized information needed to plan your exchange.