What is a Section 1031 Tax-Deferred Exchange?
When you sell real estate you are taxed on any gain or profit realized from that sale. Gain is the difference between your Basis and the amount of money you receive when you sell a property. For example, you bought a property in Dodger’s Hole for $200,000 back in 1995 and you sold it last week for $800,000. Your Basis is $200,000, and your Gain or profit is $600,000; that amount is subject to tax. However, you did not use the property as your personal residence; the majority of the time you rented it and spent very little time there yourself. You might qualify for a Section 1031 Tax-Deferred Exchange. (Note: When selling a primary residence, exclusions are available to offset capital gains.) Anyone who owns a second-home or plans on purchasing a second-home on Martha’s Vineyard should be knowledgeable about the Section 1031 Exchange laws. Implementing a 1031 Exchange is simple if you follow very precise rules and utilize the services of a reputable Qualified Intermediary. If you want t
