Earlier this year our office had the opportunity to meet via Zoom with Rob Onnen, our local FEA Qualified Intermediary and expert on 1031 Exchanges. We had a great visit getting the skinny on qualified properties and identifying clients who could benefit from an exchange. After our meeting, I was able to chat with Rob and get answers to a lot of the questions clients and consumers ask.
BG: What is a 1031 Exchange?
Rob: 1031 is a section of the Internal Revenue Code that allows a taxpayer to sell investment real estate and defer tax on depreciation and capital gains if they buy replacement property of equal or greater value.
BG: How do I know if a 1031 is right for me?
Rob: The taxpayer should ask their tax preparer to calculate the tax in an outright sale to determine the potential tax savings. This would include the 25% tax on depreciation and the 15-20 % tax on capital gains. If the property is located in another state, it could involve a state income tax as well.
BG: Can I use my own real estate broker to sell my relinquished property and find and buy my replacement property?
Rob: Yes, you should always choose a broker to assist you in the 1031 process as timing is critical.
BG: Do I have to use a 1031 company to utilize this potential tax savings?
Rob: Yes, the IRS guidelines require the use of a Qualified Intermediary to successfully defer taxes. A good QI will lead you through all the hoops and hurdles of the regulation.
BG: How much does a 1031 Exchange cost?
Rob: The fees are usually less than $1,000.00. We publish our fee schedule at www.pioneer1031.com
BG: Where can I get more information?
Rob: You can contact me, Rob Onnen, to discuss. There is no fee unless you choose to proceed with an exchange.