What is a 1031 Exchange?
What is a 1031 Exchange?
A 1031 Exchange is an important tax strategy specified in the Internal Revenue Code §1031. It allows you to defer the taxes from the sale of commercial real estate (and other business assets). This frees up that cash that would have been used for taxes so you can put it to work earning more income instead.
The code says you must purchase property with a "like-kind" property to qualify. The definition is broad but generally it means one piece of commercial property for another. Our staff can assist with the details to ensure that you are purchasing property that qualifies for the 1031 exchange benefits of tax deferred savings.
What are the benefits of a 1031 Exchange?
- The capital gain taxes you earned from the sale of your commercial real estate property is deferred.
- The money you would have paid in taxes is freed up so you can use it to earn more income.
Example of 1031 Exchange Savings
| You sell a your commercial property that was purchased for $2,000,000 and is now valued at $3,000,000. And you are purchasing another piece of commercial property for $4,000,000. | ||
| Sale | Exchange | |
| Fair Market Value Building | $3,000,000 | $3,000,000 |
| Basis (you paid) | $2,000,000 | $2,000,000 |
| Gain Recognized | $1,000,000 | $0 |
| Tax | $350,000 | $0 |
| Tax Deferral Savings | $0 | $350,000 |
| Cash Available for Reinvestment | $2,650,000 | $3,000,000 |
How to execute a successful 1031 Exchange:
To ensure an effective 1031 Exchange, it is important to do it correctly. Gold Coast Commercial Real Estate has helped countless clients successfully execute the details of the 1031 Exchange. Our agents have the experience and skill to make sure your Commercial Real Estate transaction is carried out smoothly and seamlessly. Read more about using Gold Coast Commercial as your commercial real estate brokerage.
Quick Info:
Phone:
(805) 273-9555
Address:
Gold Coast
Commercial Real Estate
340 Rosewood Ave, Suite K
Camarillo, CA 93010
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Management Site with Residential & Commercial Rentals Here
What We Do:
Gold Coast Commercial provides expert commercial real estate
services for California.
- Commercial Real Estate Properties For Sale
- Commercial Investment Sales and Purchases
- 1031 Exchange Assistance
- Property Management Services
- Commercial Building and Office Space Leasing
Areas Served:
Gold Coast Commercial
is based in Camarillo, Ventura County and serves
all of California. We specialize in Ventura County, Santa
Barbara County and Los Angeles County, however we provide service to
all of Southern California.
