New York City 1031 Lawyer Natalia Sishodia Discusses The Meaning of a 1031 Exchange
New York City 1031 lawyer Natalia Sishodia releases a new article (https://sishodia.com/1031-exchange-attorney-new-york/) that explains the meaning of a 1031 exchange. The lawyer mentions that a 1031 exchange is a type of exchange that allows one investment property to be exchanged for another in order to defer capital gains.
According to the New York City 1031 lawyer, “The rules concerning 1031 exchanges can be strict. The term 1031 exchange derives from Section 1031 of the U.S. Internal Revenue Code. This tax code allows an owner of a piece of an investment property the ability to refer paying capital gains by exchanging their investment property with one of the same kind.”
The lawyer explains that the proceeds of an investment property from the 1031 exchange are reinvested into a different investment property. Since the proceeds from a sale are subject to significant capital gains taxes, they are transferred to another investment property through an intermediary. The intermediary would then transfer the proceeds to the seller of a replacement property. This type of transaction is an exchange under Section 1031 of the U.S. Internal Revenue Code.
Attorney Natalia Sishodia mentions that a 1031 exchange allows a real estate investor to buy and sell the property without being subject to capital gains taxes. A 1031 exchange allows taxes to be deferred until the sale of an exchanged property.
In the article, the 1031 attorney says that capital gains taxes are high and can substantially eat into any profit from the sale of an investment property. With the current economic situation, these types of taxes are forecasted to trend even higher in the future.
Furthermore, attorney Sishodia discusses that the rationale for when the form of investment has changed between similar properties is that the taxpayer should not be required to pay taxes on a gain that is immediately reinvested through an exchange of properties. One reason where a real estate investor may want to take advantage of a 1031 exchange is that it affords more available capital to reinvest elsewhere.
Lastly, attorney Natalia Sishodia emphasizes the importance of having a 1031 lawyer when dealing with matters involving a 1031 exchange. Having an experienced lawyer may be able to help the client understand their rights and responsibilities in the real estate transaction.
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