What Issues Can Prevent an Effective 1031 Exchange of Property in Oklahoma?
Owners of business real estate, or real estate investors, can potentially defer taxes when they enter into a 1031 exchange agreement with another owner rather than selling outright. However, in addition to the provisions of Oklahoma real estate law, strict tax laws apply to these transactions.
To gain a better understanding of the regulations and requirements governing 1031 exchanges, review the information provided online by the Internal Revenue Service. The primary requirements for deferring taxes on the sale of property include the following:
- The properties being exchanged must be like-kind, meaning they are of the same nature, character or class.
- Only commercial or investment property qualifies for exchange. Residential property does not qualify for a 1031 exchange.
- You cannot exchange money, securities or similar items.
- To avoid taxation, you must observe strict time limits when identifying replacement properties and completing the exchange.
- You must observe all IRS reporting requirements.
Even an innocent error made at any point in the process can subject you to tax liability, penalties and interest charges on your transactions. To help avoid costly errors, it is vital to retain legal support from real estate attorneys with specific experience in this area of tax law.
Eller & Detrich has more than three decades of experience helping business owners and real estate investors effectively handle the complex issues related to acquiring and selling real property. We have a solid reputation as an innovative law firm that promptly responds to client needs, and we consider all legal alternatives when educating clients on the options available to them. Contact us to learn how we can help.
July 22, 2014 Posted in Real Estate Law Tagged 1031 exchange agreements, IRS, real estate taxes Leave a comment
