Section 1031 of the Internal Revenue Code states, "In general...No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment."

http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00001031----000-.html

http://www.fourmilab.ch/ustax/www/t26-A-1-O-III-1031.html

As it pertains to real estate, this code allows you to defer capital gains taxes resulting from the sale of investment property, if you use the proceeds of the sale to buy other investment property.

In other words, a Section 1031 Exchange (also know as a Like Kind Exchange or Tax Deferred Exchange) allows a property owner to trade/exchange one or more relinquished properties for one or more replacement properties of "like kind" without having to pay federal income taxes on the transaction(s).

By deferring capital gains, you have more money available to reinvest!

The most common type of Exchange is a Delayed Exchange where the relinquished property closes prior to the replacement property.

There are time limits and rules which must be followed.

If wanting to conduct such an Exchange, it is important to establish this prior to the closing of the relinquished property.

To speak generally regarding the requirements:

• You must use a Qualified Intermediary.
• You must identify potential replacement properties within 45 days of the closing of the relinquished property (Identification Period).
• Potential replacement properties should be of equal or greater value.
• You must close on the replacement property within 180 days of the closing of the relinquished property (Exchange Period). 

Identifying Replacement Properties

There are 3 rules governing the number of replacement properties you can identify for Exchange.

The most common method allows you to identify 3 potential replacement properties with no limit on their value.

As a Real Estate Professional, I can help you identify replacement properties which satisfy the Exchange criteria and meet your personal investment goals.

Why Orlando?

• Year-round subtropical climates
• Famous attractions including the Walt Disney World® Resort, Universal Orlando® Resort, and SeaWorld Orlando
• Plenty of golf
• Easy access to both Atlantic and Gulf beaches

These are just some of the reasons which make Orlando one of the top tourist destinations in the world (and a fabulous place to own real estate!).

We welcome nearly 50 million visitors each year with total economic impact amounting to tens of billions of dollars.

Like its attractions, Orlando’s real estate market is like no other.

For Investors, the short term rental market, secured by the stability of the theme parks, is strong.

Indeed, short term rentals have become an increasingly popular choice for scores of guests visiting the Orlando area.

While seasonality is a reality, the industry operates all year long, and good rental properties in the attractions area can yield their owners tens of thousands of dollars in offsetting rental income.

If you are looking to buy, whether you are considering conducting a real property 1031 Exchange or not, I would be happy to help you identify properties which match your wants and will maximize your investment.  Buyer representation is free.

I would also be happy to speak with anyone simply wanting to learn more about the Orlando real estate market. 

For help conducting your 1031 Exchange to Orlando,

contact Brent at info@bferryhomes.com.

- More information about Exchanges and FAQs from the Federation of Exchange Accommodators