1031 Tax Deferred | Benefits of your Virgin Island Purchase
1031 Tax Deferred Exchange
Now is the time to learn more about how you can use the 1031 tax deferred exchange on your Virgin Islands real estate purchase. Find out about the taxes, exchanges, disadvantages, what properties qualify, partial tax free exchange, common exchange situations and how the 1031 tax exchange effects partnerships and seller financing by speaking with a qualified tax deferred Realtor.
How will the 1031 Tax Deferred Exchange Benefit You?
Simple. If you have investment property you would like to sell, you Don't have to pay capital gains taxes. According to Section 1031 Tax Deferred Exchange laws "1031 (a) (1) of the Code it provides that 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."
What exactly does "like Kind" mean?
Many investors believe that they must have exactly the same kind of property in the Virgin Islands for exchange purposes. but as long as both properties are used for investment or business, you will qualify! For example; a condo can be exchanged for land or a business property can be exchanged for a single family home as long as they are intended for investment or business purposes. Even vacation homes that are used as investments may qualify for the 1031 tax free exchange.
What is a Qualified Intermediary or QI? Section 1031 creates the ability for sellers to defer capital gains on investment property by placing the sale proceeds with a qualified intermediary for up to 180 days until the closing of the purchase of the replacement property. A qualified intermediary is someone who is bonded and insured to hold your funds in an interest bearing account until the exchange is completed. Your real estate agent cannot be the intermediary, thus the need for a third party.
If this looks like the way to go for you, please contact our office and we will discuss how to complete a 1031 tax free exchange in the US Virgin Islands.
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