1031 Tax Recapture
Savvy landowners and investors know that Internal Revenue Code (IRC) Section 1031 provides a vehicle for deferring capital gain taxes when disposing of investment, ranch, farm, or income producing property. Thanks to the IRC 1031, a properly structured exchange allows a landowner to sell an income producing property, and acquire a new property, and potentially defer all capital gains taxes. IRC 1031 (a) (1) states:
“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.”
A delayed exchange is the most common exchange format. It allows the landowner or investor 45 days to identify potential properties for exchange then provides up to 180 days to acquire replacement property through the use of a Qualified Intermediary, (“QI”) to complete a valid delayed exchange.
JLH utilizes the services of one of the most capable QI’s in the U.S., and makes this service available to our clients, both Buyers and Sellers.