Section 1031 property exchanges make it possible for real estate investors to sell one property and reinvest the proceeds in a new property all while postponing the payment of capital gains tax. This is possible because section 1031 exchanges fall under the category of “like-kind exchanges.” Since the proceeds of the initial property are used immediately to purchase a similar property of equal or greater value, no capital gain is recognized under the exchange allowing the capital gain tax to be deferred.
Proper utilization of the 1031 exchange can significantly increase portfolio growth and return on investment. However, having up-to-date, comprehensive knowledge of the exchange process and Section 1031 code is crucial to harnessing the full potential of this reinvestment option. Our experienced attorneys can help the purchaser negotiate a contract of sale with the seller’s attorney and ensure that the seller agrees to cooperate with our client and the qualified intermediary to complete the underlying 1031-Exchange. On the other hand, we can help the seller draft a contract of sale and ensure that the purchaser agrees to cooperate at no additional cost to the seller to complete the 1031-Exchange, including assignment of the seller’s contractual rights and obligations to a qualified intermediary.
If you are considering performing a Section 1031 property exchange and would like to have a consultation with one of our real estate attorneys, please call us at (212) 922-1330 or fill out our Contact Us form