Key Considerations for 1031 Exchanges and Same Taxpayer Requirements - Tax-free exchanges are a critical component to any long term real estate investor. It offers many opportunities to expand their portfolio over the investing years without having to pay the federal or state government taxes on their gains or depreciation recapture taxes which can vary from state to state significantly.
Any Real Estate Investor typically already has its hands full just understanding in implementing their existing real estate investment plan and portfolio. As such, they often lacks the specific knowledge required to properly implement a 1031 exchange. The key, for any real estate investor, is to act early and seek the guidance of a qualified intermediary, who often, is very well-connected with other professionals that may or may not be required for the specific transaction. Depending on the level of complexity it may be that the qualified intermediary is the only person required to be involved or it may be that a tax attorney and CPA should also be involved in the 1031 exchange process.
Finally, speaking with a qualified intermediary, who is intimately familiar with the process, well experienced, and properly bonded and insured ( preferably a licensed CPA or licensed attorney), can save significant headaches down the road, not to mention taxes!
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