One of the Most Powerful Tax Deferral Strategies Remaining

"The taxpayer: That's someone who works for the federal government but doesn't have to take the civil service examination."

- Ronald Reagan
As many prepare their 2009 tax return hoping to get a refund, we once again want to remind you how a 1031 Exchange is still one of the most powerful tax deferral strategies remaining available to taxpayers. Taxpayers should never have to pay income taxes on the sale of property if they intend to reinvest the proceeds in similar or like-kind property.

The advantage of a 1031 Exchange is the ability of a taxpayer to sell income, investment or business property and replace with like-kind replacement property without having to pay federal income taxes on the transaction. A sale of property and subsequent purchase of a replacement property doesn't work, there must be an Exchange. Section 1031 of the Internal Revenue Code is the basis for tax-deferred exchanges. The IRS issued "safe harbor" Regulations in 1991 which established approved procedures for exchanges under Code Section 1031.

The 1991 "safe harbor" Regulations established procedures which include the use of an Intermediary, direct deeding, the use of qualified escrow accounts for temporary holding of "exchange funds" and other procedures which now have the official blessing of the IRS. Exchanges most often employ the services of an Intermediary with direct deeding.

Anyone involved with advising or counseling real estate investors should know about tax-deferred exchanges, including Realtors, lawyers, accountants, financial planners, tax advisors, escrow and closing agents, and lenders. To learn more about one of the most powerful tax deferral strategies remaining today, please visit our website or call us at 888-367-1031.