Did you know that there’s a way to defer capital gains taxes when selling an investment property? It’s called the 1031 exchange, and it’s a fantastic opportunity for investors that’s surprisingly straightforward to navigate.

Here’s the gist: when you sell one property and reinvest the proceeds into another, you can defer paying taxes on the capital gains. The process involves identifying potential replacement properties within 45 days of the sale, using a designated IRS form to list these properties. It’s wise to list several options to ensure flexibility in case your preferred property doesn’t pan out.

Once you’ve identified potential replacements, you have 180 days to close on the purchase of one of them. The transaction itself mirrors a typical real estate deal, with one key difference: the involvement of a 1031 intermediary. They handle the funds from the sale, ensuring they’re not accessible to you until the replacement property is acquired.

The rationale behind the 1031 exchange is to encourage continued investment by offering tax incentives. By deferring taxes, investors can leverage their profits to grow their portfolio further—a win-win situation.

If you’re considering investing and want to take advantage of the 1031 exchange, I’m here to help. Whether you’re in Virginia or elsewhere, I can assist you directly or connect you with a trusted agent from my network specializing in investor-focused transactions.