Forward exchanges can help investors big and small defer their taxes on the sale of real property. Our New York like-kind exchange professionals are here to help you through your exchange. Give us a call today if you have any questions about starting a forward exchange in New York – 877.373.1031.
What is a “Forward” Like-Kind Exchange?
A “forward” 1031 exchange is the most common and standard type of like-kind exchange. Here’s how it works. You sell a piece of property (either real estate or personal property). Then you identify new replacement property and move your net proceeds from your relinquished property into this new replacement property. When done correctly you can avoid a sizable tax hit on those capital gains taxes.
Forward Exchange Benefits & Requirements
Here are a few of the most important requirements of a forward exchange in New York:
- Deadlines. All 1031 exchanges need to be completed within 180 days from the sale of your relinquished property. The first 45 days of that period are set aside as your replacement property identification period.
- Qualified Purpose. The property you are exchanging has to be held for investment or business purposes. Property used primarily for personal use (like your primary residence) is excluded from 1031 treatment.
- Like-Kind. All property needs to be like-kind. If you’re exchanging real estate, like-kind pretty much means any real estate for any other real estate. You can exchange an apartment building in Staten Island for a hotel in Albany. However, with personal property, the like-kind requirement is a lot stricter.
- Value, Equity, Debt. You also want to make sure that you go up in value, equity, and debt when you roll your proceeds into your replacement property.
If you hit all of these benchmarks, you will be able to defer your capital gains taxes and roll those net proceeds into your replacement property. That’s the real benefit of a like-kind exchange – you get to avoid a tax hit and keep your money working for you in a continued investment.
New York Like-Kind Exchange Company
Like-kind exchanges can be complicated. Even the simplest of exchanges can fail if you don’t take the proper steps to ensure a successful exchange. It’s always a good idea to at least speak with a 1031 exchange professional before you dive into a 1031 exchange. Call today to talk through your like-kind exchange with one of our New York third party administrators – 877.373.1031.