| Exchanges of real estate are
the most frequent type of exchanges taking
place regularly throughout the country.
As a result of the significant appreciation
of most properties over time, the tax ramifications
can be large when these properties are sold.
For improved property, these taxes may include
both recapture taxes on the depreciation taken
as well as income taxes on the appreciation
realized. As a result, many people, and companies,
look for alternatives to the payment of these
taxes.
Special considerations for exchanges
of real estate:
•
|
For
real property, the definition of like kind
is very broad. For example, improved property
can be traded for unimproved property and
vice versa. A wholly owned property can
be traded for a partial interest in new
property (although not a partnership interest).
Real property can be traded for property
to be wholly or partially built by the
end of the exchange period. |
|
|
Who can
benefit from an exchange of real property?
Almost any person or company who may be
selling real estate and buying additional
real estate including: |
| |
• A
person moving from one city to
another who would have difficulty
managing real estate owned in a
different city.
|
• Persons
who find that the management of
their property has become too difficult.
|
• Persons
who wish to continue to own real
estate, but desire less management-intensive
properties.
|
• Companies
that are relocating plants or place
of business.
|
|
•
|
For
bona fide exchange transactions that
terminate unsuccessfully in a tax year
after the tax year in which the first
property was sold, the gain on the sale
does not have to be reported until the
tax year in which the funds were received.
In these instances, a one-year deferral
is possible.
|
Contact
a banker now for
more information. Or call us at
312-960-5317.
|
Equal
Housing Lender | Copyright
2007 | All
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