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1031 Exchange New York

How to Do a 1031 Exchange in New York?

Taxes aren’t exactly one of the most exciting topics unless, of course, you are an accountant. The old adage says that there are two things you can’t avoid – death and paying taxes. But, what if you could defer paying taxes?

Like any other important financial transaction, an apartment sale in New York is also liable to be taxed. If it’s an investment property and not your primary residence, you can be taxed on your capital gains or the profit you generate on the sale of the apartment or building. This has led to many New Yorkers looking for a simplified tax deferral program called the 1031 exchange, which lets you put off paying tax on these kinds of properties. It’s a brilliant strategy if you purchased during a downturn or had insider pricing on an apartment, or have held the place for many years, and seen the value appreciate—all reasons to consider deferring the capital gains tax payment. If you complete the exchange, the profit stays with you.

You will pay this tax eventually, but if you delay the payment for about 10 years, you will have had the money for 10 years and haven’t had to pay a single penny towards capital gains taxes. Please note, there are a lot of rules and red tape linked with the 1031 exchange program.

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1031 Tax Deferred Exchange in ‘like-kind’ properties

Here are a few essential factors you should consider before doing a 1031 property exchange. The first rule of this exchange is the investment property to be exchanged should be a similar kind of property, but it’s allowed to exchange a residential property for commercial. It’s also possible to do a 1031 exchange in NYC if you are selling off a vacation property, but most likely, it’s necessary to have it rented out as an investment for at least six months prior to the date of the sale in order to qualify.

Rigid timelines for trades

In order to adhere to the guidelines, you are required to identify a property you want to purchase within 45 days of the sale of your qualifying apartment. The next important deadline is closing on the purchase of your replacement property within 180 days of the original sale. This gets tricky if you’re trying to do a 1031 tax-deferred exchange to buy in a new construction or pre-construction building, where delays in the delivery timeline can impact the closing date.

You’ll also want to take into consideration your tax filing deadline, especially if you are selling at the end of the year. You’ll want the exchange to take place within the same tax year or with the proper planning, move it into another tax year.

Funds need to be escrowed with an intermediary

Your profits need to be with a real estate attorney in the time between the sale of your first property and the closing on the second. A qualified intermediary helps you at every step of the exchange. This is a very important part of the process.

Golden opportunity for investors doing a 1031 Exchange in New York

Though a 1031 exchange offers excellent benefits to every investor, it entirely depends on the investor’s decision and how they make the most out of their exchange. Other things like property’s location, living condition, job availability, crime rate, etc. play a significant role in shaping up the future of any real estate investment. As a 1031 investor, if you want your replacement property to be in a place that has excellent appreciation and excellent opportunities for job-seekers, New York is one such place. Plus, the resources this state provides. It’s one of the ideal locations to look for a replacement property for your 1031 exchange.

Allow Our Experts to Manage a Successful 1031 Tax Deferred Exchange for you. We at 1031xchange have expert advisors with extensive experience in handling highly profitable exchanges for our diverse client base.

To know more about 1031 Exchange in New York real estate market,you can speak to one of our advisors on 888-993-2835 or email us info@1031Xchange.com or visit our 1031 FAQs section.

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    IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax codes; therefore, all the investors/clients/consumers are advised to consult their tax and legal professional for details regarding their situation on any kind of investment. There are material risks every investor should know, associated with investing in 1031 Exchange properties, Delaware Statutory Trust (DST) and any other kind of Real Estate Properties. The risks include tenant vacancies; declining market values; potential loss of entire investment principal; that past performance is not a guarantee of future results; that potential cash flow, potential returns, and potential appreciation are not guaranteed in any way; adverse tax consequences and that real estate is typically an illiquid investment. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the Confidential Private Placement Memorandum. Please be aware that this material does not replace the PPM.

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