The sale of an investment property can create a large tax liability. A properly structured tax deferred exchange under Internal Revenue Code §1031, however, allows the investor to defer the recognition of the capital gains or other taxes associated with the sale of most investment assets, as long as the new property is purchased to replace the existing investment property. In other words, to be eligible for the favorable tax treatment afforded by an exchange, the property to be sold must have been held for investment purposes and be exchanged for like-kind replacement property, that is, income or investment property.
Exchanges must be completed within strict time limits. The Exchanger has 45 days from the date the relinquished property closes to identify potential replacement properties. The purchase of the replacement property must be completed within 180 days after the close of the relinquished property. After the 45 days has passed, the Exchanger may not change their Property Identification list and must purchase one of the listed replacement properties or the exchange fails. As follows, quick turn-around time on the real estate investment transaction is key to a successful tax deferred exchange. At Technology Credit Union our goal is to help you maximize your assets. Because we understand your business objectives, we offer quick turn around, so you can use the entire amount of the equity from the exchange without the burden of capital gains tax.
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