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Linda and Bob Reeder
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Prudential Alliance, Realtors®
Toll Free (888) 434-SOLD
(636) 861-3790
Thinking of trading up on an investment property? If so, look into 1031 Tax Exchanges (based on IRS Code Section 1031), which allow taxpayers to defer taxes on capital gains resulting from the sale of investment real estate, often a sizable sum since combined Federal and State taxes can run as high as 38 percent.
With an exchange, owners are able to preserve equity, while still selling the property. The underlying concept is that an exchange of like-kind property for like-kind property does not generate funds, which can be taxed since the profits go directly into the new or replacement property. To accomplish this, sellers hire a Qualified 1031 Intermediary (QI) to document the sale as an exchange and to receive the funds from the sale. The QI then delivers the funds directly to the closing agent for the replacement property who deeds the property to the taxpayer.
Central to a 1031 Exchange is the interpretation of like-kind property. While the common assumption is that like-kind implies land for land or a condominium for a condominium swap, the interpretation of like kind is actually less literal. Rather, it defines like kind as meaning that both the replacement and the original property must be used as an investment. So land, condominiums, single-family homes and motels can all be exchanged for one another as long as they are used in the exchanger's business or held as an investment. The amount of debt held on the replacement property must be the same as the amount of debt on the original.
1031 Exchanges are complex mechanisms and like all IRS requirements very specific. For example, exchangers have 45 days from closing to identify properties they intend to purchase and 180 days to complete the purchase. Purchase and Sale agreements must include verbiage indicating the intent to affect a 1031 Exchange.
The 45-day time frame used to be onerous for sellers. Now, they can opt for a Reverse Exchange, in which an additional third party called "the exchange accommodation title holder" (EAT) acquires title to the replacement property until the original property sells. Reverse Exchanges shift the 45- and 180-day time frame to the selling side of the transaction. With an Improvement Exchange, which also uses an EAT to hold the replacement property, sellers can build investment properties from the ground up or improve existing properties. The improvements have to be built and paid for during the 180-day period.
If you are interested in a 1031 Exchange, the first step is to consult your tax advisors as well as an attorney or CPA who is knowledgeable with 1031 Exchanges. Make sure that your Realtor® knows you plan to conduct an exchange and be sure that he or she is familiar not only with the process but also with the specific documentation and time frame mandated by the IRS.
This article is intended to inform readers, but does not constitute any financial or legal advice.
Linda and Bob Reeder provide Chesterfield Missouri real estate information and resources in order to assist home owners and home buyers with the process of buying and/or selling their Chesterfield home or other residential real estate (house, condo or other property in Chesterfield MO). Linda and Bob Reeder are top Chesterfield real estate agents and will assist you in getting the best value for your purchase or sale of a Chesterfield MO home. Their on-line services include free search of the St. Louis Multiple Listing Service (St. Louis MLS includes Chesterfield MO real estate - Chesterfield homes, Chesterfield villas, Chesterfield houses, Chesterfield lofts, and Chesterfield condominiums) with NO REGISTRATION, Email updates on new listings as they become available, and more. They provide you the information to help you learn more about Chesterfield condominiums, Chesterfield houses, and other Chesterfield MO real estate. Bob Reeder is a Graduate, REALTOR Institute (GRI). Linda Reeder is also a GRI and is designated a Certified Residential Specialist (CRS) and Coldwell Banker University Graduate (CBU). Additionally, Linda Reeder is also an Accredited Buyer's Representative (ABR). When you want a top Chesterfield REALTOR, Linda and Bob are your best choice. Linda and Bob can help you obtain financial services, professional building inspections, assist you in maximizing your relocation benefits, advise you on how to prepare your Chesterfield home for sale to maximize your selling price, and make your Chesterfield home buying or Chesterfield home selling process go smoothly and successfully. When you need a Realtor in Chesterfield MO, call us.
Our real estate practice is limited to serving clients purchasing or selling improved properties located in St. Louis County, St. Charles County, Jefferson County, and Franklin County. This includes the communities of Chesterfield, Town and Country, Clarkson Valley, Ballwin, Wildwood, Ellisville, Manchester, Maryland Heights, Frontenac, Sunset Hills, Valley Park, Fenton, St. Peters, Wentzville, O'Fallon, Arnold, Mehlville, Webster Groves, Kirkwood, Des Peres, Ladue, Creve Coeur, Eureka, St. Charles, Oakville, High Ridge, Pacific, Washington, Union, Lake St. Louis, Dardenne Prairie, Cottleville, Weldon Springs, City of St. Louis, and many more. Additionally, we do not work with improved properties under a listing price of $100,000. Exceptions are made for past clients and past client relatives on referral only, multiple purchase/sale investors, and our own friends and relatives. We regret that we can not provide service on a general basis outside of these restrictions. We will gladly refer you to a Chesterfield Realtor or Missouri Realtor who can serve you in those areas we do not have service available.
OTHER SITES WE HOST:
Information about St. Louis homes MLS search, St. Louis villas, St. Louis condominiums, St. Louis houses, and St. Louis lofts can be found at St. Louis Real Estate (Missouri).
Information about Chesterfield homes MLS search, Chesterfield villas, Chesterfield condominiums, Chesterfield houses, and Chesterfield lofts can be found at Chesterfield Real Estate (Missouri).
Information about Ballwin homes MLS search, Ballwin villas, Ballwin condominiums, Ballwin houses, and Ballwin lofts can be found at Ballwin Real Estate (Missouri).
Information about Town and Country homes MLS search, Town and Country villas, Town and Country condominiums, Town and Country houses, and Town and Country lofts can be found at Town and Country Real Estate (Missouri).
Information about Wildwood homes MLS search, Wildwood villas, Wildwood condominiums, Wildwood houses, and Wildwood lofts can be found at Wildwood Real Estate (Missouri).
FUN! Want a great vacation rental close to Chesterfield? Rent a chalet at Innsbrook. This is NOT our property and we are not offering it for rent, we just love to stay and relax there! Thought you might want to take a look at this wonderful get-away chalet at Innsbrook Rental. Linda & Bob Reeder Prudential Alliance, REALTORS 1000 Shnucks Woodsmill Plaza Town and Country, MO 63017 (636) 386-2900 |
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Linda and Bob Reeder
Toll Free (888) 434-SOLD
(636) 861-3790
