In a market where Short Sales and Foreclosures have become the norm, many taxpayers are unaware of the potential tax liability on gains resulting from depreciation deductions and "cash-out" refinances.
The taxpayer may be "forgiven" the unpaid debt with the Mortgagee, but is faced with a capital gains tax when the property is sold for more than the depreciated basis, even though no cash is received by the taxpayer.
The taxpayer will be forced to use personal funds to satisfy the tax liability arising from the sale of their investment property. Those personal funds would be better utilized invested in a new property with appreciation potential.
Cash from the "sold" property is not required to complete a 1031 exchange. An I.R.C. Section 1031 Like-Kind Exchange can be utilized to defer a capital gains tax liability by rolling forward debt from a short sale or foreclosed property, and/or by adding personal funds to a "new" property. This great tax saving tool helps the taxpayer avoid a tax liability and continue to meet their personal goal of building wealth.
When structuring a 1031 exchange, there's no room for guesswork. Peerless strategy, masterful interpretations, and insightful analysis are just a few of the advantages we bring to the exchange. You'll find us indispensable.
Whether exchanging a rental cottage at the shore or a commercial warehouse in Philadelphia, your client's tax savings is our business. Call us.
