What You Need to Know about the Benefits of a 1031 for Your Business
Despite running a small business being rewarding, it is also important to note that it is tricky. It is essential for business owners to ensure that they take advantage of all the opportunities that they get. Engaging in continuous education is important and it is also important to ensure that you are aware of the IRS 1031 exchange in case you intend to sell or buy part of the properties in your business. Buying and selling property is usually quite costly and using the 1031 exchanges, you’re going to save a lot of money while performing the transactions. By reading this article, you’re going to find out more about some of the top benefits of a 1031 exchange.
The IRS 1031 exchange was created by the Congress to allow business owners to defer their tax payment when the money which they gain from selling or buying property is reinvested in a similar property. Because of the money that businesses save while taking advantage of the IRS 1031 exchange, it means that they will be in a better position to foster economic growth in the community. It is worthy to note that there are certain kinds of properties that qualify for the IRS 1031 tax exchange. For example, a person that sells the office building to buy a Mercedes will not enjoy the benefits of the 1031 tax exchanges. When you however engage in properties that can be put into productive use, you will be eligible even if the properties are not exactly the same.
The 1031 process should be undertaken within 180 days or else you’re going to forfeit the tax benefits. The IRS will allow you about 45 days to identify a new property to purchase after selling your property. You should therefore ensure that you know the property that you want to buy before selling your property so that to receive the benefits of the 1031 exchange.
During the application of the IRS 1031 exchange, it is a good idea to use the services of a qualified intermediary. Contracting the services of a qualified intermediary to help you in the 1031 exchange process will ensure that your proposals are going to qualify for the tax deferral. Ensure that you work with a qualified intermediary that is not only trustworthy, but also cost friendly. If you want to learn more about the IRS 1031 exchanges, be sure to click here now.