1031 Like-Kind-Exchange

In most instances, the sale of real estate, other than ones primary personal residence, gives rise to a federal and a state capital gains tax liability.  This tax can be substantial and is generally payable with the property owner's federal and state tax filings for the year in which the property was sold.  Under Section 1031 of the Internal Revenue Code property owners may elect to sell their investment property and reinvest the sales proceeds on a tax deferred basis provided they meet all of the requirements and parameters of 1031 Like-Kind-Exchange including the use of a Qualified Intermediary.  Powers has been involved with multiple Like-Kind-Exchange sales transactions and can supervise, coordinate and assist investors and property owners with such a transaction.  The guidelines and requirements to effectuate such a transaction can be expensive, complicated and time consuming but with the right advice, supervision, coordination and advisors - the like-kind-exchange transaction can be financially rewarding and provide long-term financial benefits.

In order to defer all capital gains tax in a like-kind exchange, the real estate buyer should follow these guidelines:

  • The exchange proceeds must be reinvested in the acquired property and the acquired property must have the same or greater value.
  • Obtain equal or greater equity in the replacement property.
  • Obtain equal or greater debt in the replacement property or have a reduction in debt that is offset with additional cash at closing from the taxpayer.
  • Receive nothing except like-kind property.

Although not a Qualified Intermediary Powers can assist a property owner or investor with the qualified intermediary selection process and assist in obtaining the necessary advice, documents and administration required to complete such a transaction.

As a commercial real estate broker and consultant, Powers can also assist the Seller, Property Owner or Investor with the following 1031 Like-Kind-Exchange services, including:

  • Property identification including defining acquisition and investment criteria, asset type, return-on-investment thresholds and geographic parameters
  • Provide acquisition underwriting and financial analysis
  • Coordinate and complete acquisition due diligence
  • Coordinate and arrange debt financing
  • Coordinate transaction closing and overall interaction with the Qualified Intermediary