What do you do if you have property you would like to sell but are worried about paying capital gains…
What do you do if you have property you would like to sell but are worried about paying capital gains taxes?  We are here to help with some information about Section 1031 of the Tax Code.  First of all, capital gains equals sales price of property minus cost of property.  Uncle Sam makes you pay taxes on that gain. In order to defer payment of capital gains taxes, you must understand and follow of the legal requirements.  The properties that qualify are 1. non owner occupied property held for over a year; 2. commercial real estate; 3. raw land.   You also need a Qualified Intermediary (QI) who is a disinterested party who has not acted as your agent within the past two years.  The QI will guide you through the process and hold all funds.  We can refer you to an excellent QI.
In order to have a fully deferred exchange, the taxpayer must sell his property and buy replacement property(ies) of greater or equal value.  The taxpayer must then reinvest all proceeds from the sale of the relinquished property(ies) and must then re-acquire debt equal to or greater to the debt paid off from the original relinquished property(ies).  Additionally, there is a strict time frame involved.  The taxpayer has 180 days from the time of closing on the relinquished property to close on the newly acquired property(ies) and only 45 days to identify that replacement property.  Most importantly, a taxpayer is not eligible for Section 1031 deferment after his/her property has closed.  It is essential that the QI engage a QI prior to closing.  For properties under $1,000,000, the cost of a QI is usually less than $1,000.  If you have any questions or a property you would like to sell and use the proceeds to reinvest, please contact Bright Homes Atlanta.
If you're in the North Atlanta area on a weekday, odds are you may find Carrie camped out at a local coffee shop. Having lived in the area since 1985, she knows all the hot spots and enjoys supporting local businesses while conducting business of her own.
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