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|New Jersey Business
Lawyer | Business Formation
| LLC Limited Liability Company | IRS Tax | Business
Purchase | LLC Lawyer
People Overpay the
Government...But Certainly Not our clients!
J. Cappuccio, J.D., LL.M. (Tax)
Counsellor at Law
1800 Chapel Avenue West, Suite 128
Cherry Hill, New Jersey 08002 US
(856) 665-2121 Fax (856) 665-9005
is the test to find whether your mission on Earth is finished: If
your alive it isn't."
Small and Emerging Businesses become more profitable!
Capital Gains Tax on Investment Property
What is the
Like-Kind exchange can
help you dispose of highly appreciated
property and defer or eliminate capital gains. The exchange can help
you switch from lower income properties to those offering a higher
return. A Like-Kind exchange can help you switch from raw/agricultural
land to a commercial rental property.
What is a like
Revenue Code §1031 provides for the deferred
taxation of exchanges of certain investment
There are strict rules that must be followed in order for the exchange
to work. In addition to both the old and new properties qualifying as
"1031" property, the properties must be exchanged through a "Qualified
Intermediary" within 180 days of the sale.
What a Like
kind of Exchange is Not
is not a vehicle
for selling one vacation home and buying another.
This is not a vehicle for exchanging one business for
another (although the real estate involved with the business, as well
as some other assets may qualify.) This is not a vehicle for
immediately transferring ownership to your children (although
this process can be an important estate planning tool!)
Steps to a
Selling property must
be qualified 1031 property
2. The Agreement of sale should
be designed for a Like-Kind Exchange by your tax lawyer.
3. The seller has 45 days from
the date of settlement to specify
4. The Seller has 180 days from settlement to close on
like-kind property from the list.
5. The money from the first settlement must be held by a Qualified
6. The seller of the first
property must take title to the exchanged property.
7. Debt in the property may be
subject to taxation.
a list of 1031 qualified exchange
By deferring taxation,
even at the more favorable capital gains rates,
permits a taxpayer to grow wealth faster. If a property were sold worth
$100x, $20x would be capital gain, and there would be State taxes. The
net amount to invest is $80x. If the entire property were exchanged in
a 1031 transaction, there would be no reduction in investment and the
entire $100x would be available for growth. If the properties are
leveraged by a mortgage loan, then the growth for the exchanged
property is far more advantageous.
Before you sign a
listing agreement or Agreement to
Sell investment property, have the agreement modified by a tax attorney
for a potential like-kind exchange.
call me at (856) 665-2121
Email me to discuss
financing for your business.
2007 Ronald J.
Cappuccio, J.D., LL.M.(Tax) 1800 Chapel
Avenue West, Suite 128 Cherry Hill, NJ 08002 USA (856) 665-2121