New York City 1031 lawyer Natalia Sishodia (https://sishodia.com/1031-exchange-attorney-new-york/) releases a new article that explains the purpose of having a 1031 exchange. The lawyer mentions that a 1031 exchange is a type of exchange where one investment property can be exchanged for another in order to defer capital gains. A 1031 exchange, however, can be strict and have complicated rules.
According to the New York City 1031 lawyer, “The term 1031 exchange derives from Section 1031 of the U.S. Internal Revenue Code. This tax code allows an owner of a piece of an investment property the ability to refer to paying capital gains by exchanging their investment property with one of “like-kind.” In a 1031 exchange, the proceeds from an investment property are reinvested into a different investment property in an exchange instead of a sale/purchase.”
The lawyer explains that the purpose of a 1031 exchange is to allow a real estate investor to buy and sell a property without being subject to capital gains taxes. These taxes are deferred until the final sale of the exchanged property.
Attorney Natalia Sishodia also mentions that in the present time, the capital gains taxes are high and can substantially eat into any profit from the sale of an investment property. These types of taxes also have the possibility of becoming higher in the future.
In the article, attorney Sishodia discusses that there are possible reasons why a real estate investor may want to take advantage of a 1031 exchange. These reasons include that the deferment of capital gains taxes is allowed until the final sale of an exchanged property, that the exchange will afford more available capital to reinvest elsewhere, and that in a 1031 exchange, the depreciation recapture gain is postponed.
Furthermore, in a 1031 exchange, while the investment grows, the investor will only be required to pay one capital gains tax at the final sale of an exchanged property, typically at a long-term rate. A 1031 exchange can also be utilized as many times as the investor wants as long as the requirements are met.
Lastly, the 1031 lawyer emphasizes the importance of having a skilled lawyer when it comes to matters such as a 1031 exchange. An experienced lawyer may be able to help the client understand their rights and responsibilities in the exchange.
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Sishodia PLLC’s team of professional New York City 1031 lawyers pride themselves on their ability to give the most comprehensive advice and guidance possible for their clients. The lawyers at Sishodia PLLC take time to fully understand each client’s unique goals and circumstances, minimizing potential risks and issues. Call them today at (833) 616-4646 for a consultation.
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Sishodia PLLC is a boutique New York real estate law firm offering experienced, individualized legal solutions to clients ranging from first-time homebuyers to seasoned real estate investors.