What is the advantage in replacing my existing property with a “like-kind” property, and what happens if I can find such a property?
The advantage of doing an exchange is that you can shelter your gain from taxation. If you have a $100,000.00 gain on the sale of your property you can save $25,000 in federal tax and another $4,000.00 to $10,000.00 in state income taxes (depending on your state rate) simply by purchasing a qualified replacement property. If you start the process of an exchange and for any reason can’t find a suitable replacement property, you simply cancel the exchange and report the transaction as a sale.
Related Questions
- What is the advantage in replacing my existing property with a "like-kind" property, and what happens if I can find such a property?
- When a property is purchased and possession is granted, is the property owned outright? What happens to any existing mortgages?
- I’ve found a property that I’m interested in. What happens next?
