Matt Hektoen, a real estate lawyer at Simmons Perrine Moyer Bergman PLC address the Iowa City Area Association of Realtors Commercial Round Table, and presented a timely, valuable and complete update for the 1031 tax deferred property exchange law. The basic idea is that a property seller may elect to exchange his property via the Internal Revenue Code 1031. By performing some basic protocol and adhering to strict time limits, the seller may defer capital gains tax that would be due on the sale of the property to a later date. By deferring this tax, the seller may use all of the sale proceeds to acquire a new property and maximize his investment in that new property.
The “devil is in the details” and there are many such details with a 1031 tax deferred exchange. It is wise to employ a real estate lawyer and a CPA familiar with exchanges to meet the critical deadlines and structure the sale in the proper manner. If improperly executed, the seller may be subject to additional tax and penalties, but if done properly a 1031 can be an effective planning and investment tool. For more information Matt can be contacted at firstname.lastname@example.org or (319) 896-4030. Thanks, Matt for a great presentation.