You have decided to move the office of your business, because now you are able to get a bigger price for the space you have purchased a few years ago with a small sum. But you are aware that a big part of the profit will be subject to the taxes, and this is a drawback for your business. You would want to use the money to invest in a modern space, and you need every penny. Well, in this case you should start doing some research, because you have the possibility to acquire the property you want without having to pay any tax when selling the actual space of the business. All you have to do is to apply for a 1031 exchange. This method offers you the possibility to find a replacement space for your investment property, so you should take a look at the 1031 exchange properties for sale. Here are some tricks that will help you avoid having any issue when doing a 1031 exchange.
Like-kind properties have to be exchanged
You want the exchange to be considered valid, so you should make sure that you do the swap between properties of the same kind or type. Level or quality of improvement is not important in this case. Here are some examples of properties that can be used in the exchange: you can swap a rental property for an unused land, a hotel for a retail space, a golf course for a farm, and so on. But you have to make sure that both of the spaces are located in the United Space, because the exchange is not valid if you choose a space outside the United States.
Caution is essential when exchanging a personal property
When it comes to investment properties, the like-kind factor is relatively loose, but if you want to use the swap for a personal property, then you should now that the rules are stricter. For example, the exchange does not consider being the same a truck and a car, even if both of them are vehicles. In case you want to conduct a 1031 exchange for a personal property, then it is recommended to talk with an expert in this domain, because you have to be sure that, you avoid a legal problem.
Make sure the space you use in the 1031 exchange meet the requirements
If you want the exchange to be valid then you have to be sure that you meet the essential requirements of the swap. You property has to be hold for an investment, business or trade. In case you use it for personal reasons then it is considered a vacation home or primary residence, and you will not be able to avoid paying the taxes if you want to sell it. Also it is important to check the list with properties excluded by the method, because you will not be able to exchange certificates of trust, notes, bonds, stocks or other securities.