The 1031 tax exchange in Davenport IA is a tax deferment plan that helps you to avoid having to pay capital gains tax on the sale of investment property. It is a great opportunity to build wealth, build cash flow, reinvest the gains and defer paying large chunks of money to the IRS. The 1031 tax exchange in Davenport IA is a great opportunity but it is not without caveats.
The Pros
There are clear pros to using a professional to help you take advantage of this tax benefit. Those benefits include:
- Having more money to reinvest
- Protecting your wealth
- Building your wealth
- Protecting your cash flow
You will have more control over your gains by having a professional manage your exchange. It is a smart financial move that you can utilize over and over.
The Cons
There are caveats with this tax deferment plan that can be difficult to comply with unless you have the assistance of a tax attorney on board:
- You must reinvest the gains within 45 days of the sale
- You may have future increases in tax rates to deal with
- Taxes are only deferred not free
- Losses are not recognized
- Other caveats that a real estate attorney can explain to you
It is critical to overcoming the con’s that you have a professional on board that is familiar with the 1031 rules and that can work with you to ensure that you can meet the caveats to enjoy the benefits. The right attorney will be able to explain in detail what the rules mean to you and how you can plan to take advantage.
Before You Sell
It is vital that you sit down with an attorney that specializes in real estate and tax law to have a conversation about how you will take advantage of this deferment. Having a plan in place before you sell is the best way to avoid missing out on this tax deferment plan. It can be a challenge to try to meet the caveats after you have sold off your interest in the property and you could miss out on valuable savings. David J Franks Attorney at Law is the attorney you want to contact about the 1031 exchange. He has a wealth of knowledge that can help you to plan and take advantage of the exchange.
