What Is a 1031 Tax Free Exchange Prepared by an Attorney?
A 1031 Tax Free Exchange is a tax planning tool in real estate that produces huge tax savings to owners of real estate. Essentially the way a 1031 exchange works is that if you own business real estate property or investment real estate property and you desire to sell that existing property and purchase a brand new property which is more expensive than your current property then you can essentially do this without having to currently pay the capital gains tax if your property has appreciated. When real estate business property or investment property is sold you will be subject to capital gains tax on that as you have built some gain in the property. However, by utilizing the 1031 exchange mechanism you can sell your current property and “immediately” purchase your new property without having to pay that capital gains tax. What you will need is a “qualified intermediary” that can facilitate your 1031 Exchange. An attorney is such a “qualified intermediary”. A lawyer will prepare your 10
