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Deferring Tax on Mixed Use Properties

Exchange Update

Utilizing IRC Sections 1031 and 121

When it comes to issues related to capital gains taxes associated with the sale of real estate, there are two primary provisions of the tax code that apply, IRC Section 1031 and IRC Section 121.  Many people are unaware that when a property is used as a personal residence as well as for business or investment purposes, it is a mixed-use property that can benefit from both provisions of the tax code at the same time.

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Seller Financing Strategies and 1031 Exchanges

In this real estate market where financing is sometimes not readily available, sellers who are motivated to sell may offer to finance a portion of the purchase price.  At the closing, the buyer deposits some cash and signs a seller carryback note for the balance.  If structured as an installment sale under IRC Section 453, the seller pays tax on any gain as the payments are received rather than paying tax on the gain in the year of sale for the entire purchase price.

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Understanding 1031 Exchanges with Farms and Ranches

Understanding 1031 Exchanges with Farms and Ranches

Exchangeable Assets, Like-kind Requirement, and Identification Period – Farmer/Investors interested in selling a farm or ranch using a like kind exchange also know as a 1031 exchange should focus on the particular property being sold and purchased in order to maximize various tax tools including the amount of capital gain that they will be able to defer. Understanding the different tax tools can help investors maximize their tax saving and the amount available for re-investment.

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