If the rule described in answer two above is violated, a partially tax deferred exchange is the likely outcome. If the exchanger trades down in either fair market value or equity then some gain is likely to be recognized. If the exchange is otherwise valid, a partially deferred tax exchange is the result. (Also see answer to question 4, below.)

Internal Revenue Code Section 1031 allows taxpayers the opportunity to defer capital gains taxes owed upon the sale of investment or income property by exchanging the property for other like-kind property. The IRS states specific guidelines that must be followed and a Qualified Intermediary provides for a safe harbor exchange by assuring adherence to these guidelines.

If you have an asset used for business purposes (i.e. rental property, business vehicle, business equipment, etc.) which, when sold, will present you with a gain, you may be eligible for a §1031 tax-deferred exchange. It allows you to defer the gain by exchanging the asset to be sold for another like-kind asset. By doing so, you are able to defer recognition of the gain until you sell the new asset, as long as it is not exchanged also.

It is applicable when the property in question falls within the "like kind"definition and the principal intends to BUY another property of "like kind" within 180 calendar days following the close of escrow from the SALE, and when the Investor has a recognizable gain. CAUTION must be exercised in this area.

No. For an exchange to be 100% tax deferred, the Exchanger must acquire a replacement property that is of equal or greater value and spend all of the net proceeds from the relinquished property.

You should use Internal Revenue Service Form 8824 Like-Kind Exchanges to report your tax deferred exchange in the year you sold the Relinquished Property. If you complete California Form 593-C, Real Estate Withholding Certificate for Individual and Non-Individual Sellers (to download a copy of Form 593-C, click here) and submit it to your Escrow Company, you will be exempt from the California Franchise Tax Board withholding procedures.

Basically, a deferred exchange is where a taxpayer enters into an agreement to transfer the relinquished property in exchange for property which the taxpayer has not yet located or identified. If (i) both properties are used by the taxpayer for business or investment purposes and (ii) the transaction is properly structured pursuant to the requirement of IRC 1031, then the taxpayer will not incur any income tax on the disposition of the relinquished property.

The government has developed a method to let you use the taxes you owe on the sale of a property to buy more property. It is the 1031 tax deferred exchange. They will let you continue to use the tax money you owe as long as you keep it in investment real estate. When you sell a property you will owe (assuming it has appreciated) federal capital gains tax on any gain you realize. Depending on what State the property is located you may also owe a State tax on the gain.

A 1031 tax deferred exchange is an investment tool where the taxpayer transfers property held either for productive use in a trade or business or for investment purposes and subsequently receives another property to be held either for productive use in a trade or business or for investment without recognizing any gain or loss.

The term "tax-deferred" refers to payroll deductions which are not subject to federal or state taxes at the time of the deduction. Taxation of the income is delayed or "deferred" until the money is withdrawn from a retirement plan account at the time of retirement.

A tax-deferred savings plan allows employees to save for their own retirement with pre-tax contributions. This program is sometimes referred to as the "Cash Match" plan because UVA will match 50% of what an eligible employee contributes up to a ceiling of $40 per month. The cash match ceiling for Medical Center employees hired after September 1 of 2002 is 2% of creditable compensation.

The general rule is that, in order to have a fully tax deferred exchange, the exchanger must trade equal or up in equity and equal or up in fair market value. The effect of this rule is that the exchanger must use the entire net proceeds from the relinquished property as down payment on the replacement property. Also, the exchanger must replace any mortgage paid off at the sale of the relinquished property with an equal or greater mortgage on the replacement property.