The 1031 Reinvestment Plan: A Complete Guide to Tax-Free Real Estate Sales
The Tax-exempt Sale by ReinvestmentNumerous benefits and advantages are available to sellers of §1031 like-kind properties who, rather than "cash out" on the sale of their property, couple the sale with the purchase of replacement property(ies). Thus, a reinvestment is arranged that establishes the seller's continuing investment in the ownership of like-kind real estate, a requirement to qualify the sale for profit tax exemption under Internal Revenue Code (IRC) §1031.One or more of these benefits and advantages becomes the motivating factor influencing an investor's decision to sell one property and buy replacement property in a tandem transaction called a §1031 reinvestment plan.If a broker knows the advantages of buying and selling under §1031 rules, the broker:-can undertake the duty to determine how his client might benefit from §1031 tax treatment by advising his client about the benefits [See Chapter 2];-can arrange a reinvestment where the motives of opposing parties to buy or sell may differ; and-can be rewarded by receiving two fees for giving advice and assistance in the negotiations of the two transactions.