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Simple English definitions for legal terms

1031 exchange

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A quick definition of 1031 exchange:

A 1031 exchange is when someone sells an investment property and uses the money to buy a similar property instead of keeping the money. This allows them to defer paying taxes on the profit they made until they sell the new property. They have to buy the new property within 45 days and it has to cost the same or more than the original property. They can buy multiple properties to fulfill this requirement. The taxes they eventually pay will be based on the changes from the exchange.

A more thorough explanation:

A 1031 exchange, also known as a tax-deferred exchange, is a process that allows investors and organizations to replace one investment with a similar one instead of keeping the proceeds. This exchange enables the investor or organization to defer capital gains taxes until the new investment is sold for the proceeds.

For example, let's say an investor sells a rental property for $500,000 and wants to purchase a new rental property for $600,000. Instead of paying capital gains taxes on the $500,000, the investor can use the money to purchase the new property and defer the taxes until the new property is sold.

Section 1031 of the Federal tax code governs 1031 exchanges. It requires the investor or organization to select a new investment within 45 days and complete the purchase within 135 days after identification. The new property must cost the same amount or more than the original property, and they can acquire multiple similar investments to fulfill this requirement.

The basis for the original investment will be adjusted to reflect the changes from the exchange of property so that the final capital gains taxes will accurately reflect what gain or loss the investor incurred.

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MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
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