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1031 Exchange Uses On A Denver Tax Return
September 5, 2018
Many individuals do not know or understand some of the different options available to them when completing a yearly tax return. Not to say individuals or families are attempting to forge an idea or cover a source of income, as most everyone is attempting to legally complete their return, but many are unfortunately unaware of the various possibilities available to them. These methods can be both cost effective and educational once analyzed and appropriately administered. Depending on your personal finance situation and how monies were spent and received during the calendar year for the return, one such option would be a 1031 Exchange, if a qualifying transaction was completed.
The 1031 or “Like-Kind Exchange†allows someone to take money earned from the sell of a property and put it back into the purchase of another, while deferring any capital gains taxes from the initial purchase. Capital gains taxes are typically paid on the difference in how much an entity was purchased for versus the corresponding sale price.
These 1031 exchanges are useful when someone utilizes them in any of the following scenarios.
An individual can sell one business and then reinvest any profits into the purchase of another business. The type of businesses involved in the transaction do not necessarily have to be identical. Instead, so long as both are business entities the tax deferral can be used if the like kind exchange is completed within the appropriate time frame.
One of the more common uses, real estate sales and investments often present suitable like kind transaction opportunities. Profits from one property can be reinvested into another, if all timeline restrictions are followed.
Originally, like-kind exchanges for farmer’s was the premise behind developing a tax deferred system for profits. These individuals were routinely selling and then reinvesting money immediately back into their livelihood and the same applies today.
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This category varies but if there are other qualifying elements which may fit into the like-kind transaction then use of this method could be beneficial.
If you need help in determining which transactions you have completed may qualify for a 1031 exchange or if the two properties used carry a like-kind agreement then we can help. Offering assistance in determining an appropriate course of action for individuals who wish to find out more about this process, the accounting experts at Bloch, Rothman, and Associates will be pleased to assist you. Our associates work with you to help ensure all your tax requirements are met appropriately and distributed in a timely manner. Known for also providing payroll assistance, they can help with a variety of accounting, bookkeeping and essentially any aspect on either the individual or business level. Whether you need an explanation for a random tax form, are potentially in need of appropriate representation in tax court, or could use help in potentially a variety of other various services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us for your initial free no obligation consultation.
The 1031 or “Like-Kind Exchange†allows someone to take money earned from the sell of a property and put it back into the purchase of another, while deferring any capital gains taxes from the initial purchase. Capital gains taxes are typically paid on the difference in how much an entity was purchased for versus the corresponding sale price.
These 1031 exchanges are useful when someone utilizes them in any of the following scenarios.
Businesses
An individual can sell one business and then reinvest any profits into the purchase of another business. The type of businesses involved in the transaction do not necessarily have to be identical. Instead, so long as both are business entities the tax deferral can be used if the like kind exchange is completed within the appropriate time frame.
Real Estate
One of the more common uses, real estate sales and investments often present suitable like kind transaction opportunities. Profits from one property can be reinvested into another, if all timeline restrictions are followed.
Livestock
Originally, like-kind exchanges for farmer’s was the premise behind developing a tax deferred system for profits. These individuals were routinely selling and then reinvesting money immediately back into their livelihood and the same applies today.
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Other
This category varies but if there are other qualifying elements which may fit into the like-kind transaction then use of this method could be beneficial.
If you need help in determining which transactions you have completed may qualify for a 1031 exchange or if the two properties used carry a like-kind agreement then we can help. Offering assistance in determining an appropriate course of action for individuals who wish to find out more about this process, the accounting experts at Bloch, Rothman, and Associates will be pleased to assist you. Our associates work with you to help ensure all your tax requirements are met appropriately and distributed in a timely manner. Known for also providing payroll assistance, they can help with a variety of accounting, bookkeeping and essentially any aspect on either the individual or business level. Whether you need an explanation for a random tax form, are potentially in need of appropriate representation in tax court, or could use help in potentially a variety of other various services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us for your initial free no obligation consultation.