HOUSTON REAL ESTATE TRANSACTION ATTORNEYS
Serving Clients in Houston, West Houston, Southwest Houston, Sugar Land, Katy, Copperfield, Memorial, Spring, Northwest Houston, Northchase, Spring Cypress, Champion Forest, The Woodlands, Kingwood, Humble, Lake Houston, Midtown, Memorial, West Oaks, Royal Oaks, Clear Lake, League City, Westchase Business District, Harris County, and Galveston County.
IRC SECTION 1031 DEFERRED EXCHANGE – LIKE-KIND EXCHANGE
Assisting Our Houston Clients Defer Capital Gain Taxes to Increase Their Purchasing Power
Section 1031 of the Internal Revenue Code (IRC) allows investors the opportunity to reinvest their earnings from the sale of a commercial property, which could include a residential investment property, into another “like-kind” property, deferring payment of capital gain taxes on such property. That is, investors can use the proceeds from the sale to purchase another commercially related property that is similar in kind and defer payment of taxes on the capital gain until at a later time. Thus, instead of paying the IRS the capital gain, investors can use that money to reinvest and build their assets. The Houston 1031 Deferred Exchange Attorneys and the Houston Commercial Sale Lawyers will work with brokers and agents in assisting our clients in identifying and purchasing “like kind” properties and defer paying capital gains tax thereby making the most out of their investment. Please contact our Spring Real Estate Attorneys and our Northchase 1031 Like-kind Exchange Lawyers for more information.
To take advantage of Section 1031 Exchange, investors must identify an interested property prior to the consummation (the closing) of the sale of the commercial property. The proceeds must be directly delivered to an escrow account with an escrow company or a law firm that has an Interest On Lawyer’s Trust Account (IOLTA), such as Law Offices of Steven Tuan Pham, with specific instruction to use the proceeds to purchase a like-kind property within 180 days after the sale of the property. Thus, the new like-kind property must be identified before the close of the sale so that the proceeds from the sale would go directly to the new property at a later time.
Alternatively, the exchange can also be “deferred” if the Seller has not identified a like-kind property by the closing date, a Starker Deferred Exchange (after the case Starker v. United States, 602 F.2d 1341 (9th Cir. 1979)). In a Starker deferred exchange, the property must be identified within 45 days after the sale of the capital asset. Again, the transaction must consummate within 180 days from the date of sale. Additionally, however, the proceeds of the sale of the capital asset must be transferred to a Qualified Intermediary. A Qualified Intermediary is a company that specialized in ONLY Section 1031 exchanges and follows specific instructions from the IRS to use the proceeds to purchase a like-kind investment property on behalf of the Seller.
Our Houston 1031 Deferred Exchange Attorneys and our West Houston Real Estate Transaction Lawyers at Veritas will assist you in identifying and setting up an account with a Qualified Intermediary company and/or with an experienced commercial real estate agent to identify and purchase like-kind properties. Our Houston Real Estate Attorneys will also assist you in the closing of the sale, as well as assisting you in the purchase of a new investment property.
The information above is NOT intended to replace a personal consultation with our Houston Real Estate Transaction Lawyers and our Spring Houston Real Estate Litigation Attorneys. Readers should not construe the information as a consultation. There may be other legal issues based on the specific fact of each case. Every case is unique and our Houston Real Estate Transaction Attorneys and our North Houston Real Estate Litigation Lawyers need to review the facts and circumstances of each individual case in order to provide a meaningful personal consultation. Please feel free to give us a call at 713-517-6645 or complete our Contact Form.