1031 Exchange Illinois: What Does it Mean?
1031 Exchange Illinois: If you have ever took part in a property exchange, then perhaps you came across the 1031 exchange. Any escrow company is familiar with this type of exchange, but a seller might not know what the term defines.
If you are among those people who are curious to find out what a 1031 exchange Decatur is, then read on. This article will explain everything about 1031 exchange in Christian County, Decatur, Illinois, Montgomery County, Shelby County, Springfield, and Taylorville.
Definition of 1031 exchange
The 1031 exchange refers to Section 1031 of the United States Internal Revenue Code. Under this section it is stated that the exchange of certain types of property may defer the recognition of capital gains or losses due upon sale.
The IRC or the Internal Revenue Code is a set of tax laws in the United States. It covers, for example, income tax, payroll taxes, gift taxes, estate taxes and excise taxes. It also includes the procedures and administration and its laws are implemented by the Internal Revenue Service.
The 1031 exchange Springfield is also known under the term of “like kind” changes.
In every transaction, the property owner has to pay a tax for the gain realised in the sale. However, with the help of a like-kind exchange or a 1031 exchange, the payment of this tax is delayed until a future date.
In other words, this is a tax-deferred exchange.
What are the advantages of exchanging versus selling?
If you are a property seller or buyer, perhaps you understand this better than others. This 1031 exchange is perhaps the only (or among the very few) techniques available which can allow you to postpone, delay or eliminate taxes.
It is especially profitable for those who are in business. By deferring the payment of this tax, they have more money to invest in their business.