Homes In Durango | Durango Real Estate

TAX DEFERRED EXCHANGES: Internal Revenue Code Section 1031 states: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment." This code provides that capital gains taxes are deferred when investment real estate is exchanged rather than sold.

Over the long term, acquiring real estate through exchanges is an excellent method of building wealth. Section 1031 allows continued exchanges, enabling the owner to increase equity without the burden of capital gains tax. We've seen a lot of real estate investment dollars move to the Durango area via 1031 Exchanges.

Important items involved in a 1031 Exchange:

- Both your old property and new property must qualify as 1031 property.

- You have 45 days after the closing to prepare a list of properties you want to buy.

- You have 180 days after the closing to acquire one or more of the properties on your 45 daylist.

- You may NOT touch the money. Typically the money is held by a "Qualified Intermediary"

- The holder of title to both your old property and your new property have to be the same.

- In general, you must equalize the debt on your old and new property.

This should not be construed as providing tax or legal advice. If tax or legal advice is needed, please consult your attorney or accountant. Or, we can put you in touch with a "Qualified Intermediary" in Durango.

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