Call Us Today 630-780-1034

Yorkville 1031 Exchange Attorney

Oswego Lawyer for Section 1031 Exchanges

Kendall County Lawyer for 1031 Exchanges to Defer Capital Gains Taxes

For owners of investment properties looking to sell and purchase another property or properties, the potential to defer capital gains taxes is an inviting proposition. By following what is known as a 1031 exchange (from Section 1031 of the U.S. Internal Revenue Code), the seller of an investment property can take the proceeds from the sale of the property and use it to purchase a like-kind property or properties and the capital gains taxes from the sale will be deferred.

The property or properties you are buying must be of equal or greater value than the one you sold. To make the sale qualify under section 1031, the proceeds must be transferred via a qualified intermediary and not conducted directly between the buyer and seller. The intermediary must not have a formal relationship with either of the parties involved in the sale.

For example, an investor may sell a small commercial property in Naperville and take the proceeds to purchase a similarly-priced industrial property in Aurora or Yorkville. The investor may see better potential in the new property or want to diversify their portfolio. Either way, they benefit by being able to defer capital gains taxes on the sale. The new property must be identified within 45 days after the sale and the purchase must close within 180 days.

Aurora, IL Lawyer for 1031 Exchanges

As an investor, you want to keep as much capital on hand as possible and defer paying any capital gains taxes. Using a 1031 exchange, the value you receive from one sale can go directly into another instead of cashing out and paying the taxes before your next investment. As long as you want to keep investing in real estate, this can be a great tool.

Reasons to use a 1031 exchange include:

  • If the new property or properties has the potential for a better return
  • You want to keep investing in real estate but through a more diverse portfolio of properties or property types
  • You are looking to consolidate multiple properties into one or just a few.
  • You want to reset the depreciation clock on your property.

Times when a 1031 Exchange might not make sense for an investor include:

  • When you are likely to be in a higher tax bracket in the future. You'll be paying more when you eventually cash out.
  • If you are in a low enough tax bracket or have taken a loss since you won't have to pay capital gains taxes anyway
  • If you are looking at other non-real estate investments you'd rather invest in.

Section 1031 Exchanges are great opportunities for investors to make real estate a part of their estate planning portfolio. As long as you do not sell the property, the tax deferment you receive during the exchange continues after your death. When your heirs inherit the property, the property value takes on the fair market value, and the tax deferment debt is wiped out. Since there are minimum holding times and usually a high level of investment required, you should work with an experienced 1031 Exchange attorney for this strategy.

Trust a DeKalb County Attorney With 1031 Exchange Expertise

At Gateville Law Firm, we can help you determine if using a 1031 Exchange is the right strategy for your real estate transaction. Given the complexity of the procedure, it is essential that you work with an experienced real estate attorney who can guide you through the process. If you are a real estate investor, the tax deferment benefits of a 1031 Exchange could be a great opportunity. Call our office at 630-780-1034 today or contact us via email to discuss 1031 Exchange prospects and for any other commercial real estate investment needs. We have offices in Yorkville and Naperville and serve all surrounding areas, including Plano, Joliet, Plainfield, Aurora, Sandwich, Bristol, Somonauk, Oswego, Will County, DeKalb County, Grundy County, and Kendall County.

Back to Top