When considering whether or not a 1031 exchange is right for you when it comes to dealing with real estate you may have, there are four key types of exchanges you can choose from. Continue reading for more info and to see how 1031 exchanges or starker exchanges in Davenport, IA, are set up.
1 – Simultaneous Exchange
A simultaneous exchange happens when the sale and transfer of property, titles, and funds all occur at the same time. Any delay in these transfers can cause the deal to be declared null and void and taxes may be owed on any profits earned from the sale of said property.
2 – Delayed Exchange
With the delayed exchange, there is a maximum of 45 days to find the property that the tax-free profits will be used for and a total of 180 days to complete all sales and transfer of property titles. In addition to the numerous tax benefits, the additional time allowance is very appealing to many people.
3 – Reverse Exchange
This exchange, which is also commonly known as a forward exchange, is basically set up with a buy first pay later approach. This is a very appealing feature, but it is tricky to pull off at times because the reverse exchange requires all cash transactions. To further complicate things many lenders won’t offer loans for them.
4 – Construction/Improvement Exchange
This type of exchange makes it possible for a taxpayer to make improvements to other property and utilize the equity in the property that they sold. This and all starker exchanges in Davenport IA need the help of a skilled and experienced tax expert to be sure everything goes smoothly.
Call us today here at DJF Exchange to learn more about our tax services.
