California Tax-Deferred, 1031 Exchange Lawyers

A 1031 exchange is a process that allows real estate investors and commercial property owners to defer paying state and federal capital gains income tax when selling one piece of qualified real estate and purchasing another.

Technically, one property is exchanged for another, rather than sold. Since an exchange is not a taxable event, the capital gains taxes are deferred.

At the Law Offices of David G. Finkelstein, our real estate attorneys provide comprehensive services to clients as we guide them through the 1031 exchange process.

We are a qualified intermediary for 1031 exchanges.

Also called a Starker exchange or a like kind exchange, the 1031 exchange refers to section 1031 of the Internal Revenue Service code. To take advantage of its significant tax advantages, an investor must:

• Enter into an exchange with a qualified intermediary before relinquishing (selling) the first property.
• Hold title to the replacement property in exactly the same way as the relinquished property.
• Sell the first property and have the proceeds of the sale held by the qualified intermediary company.
• Given written notice to the qualified intermediary of the property you wish to acquire within 45 days of entering into the exchange.
• Acquire a replacement property within 180 days of the closing on the relinquished property.

The qualified intermediary then exchanges the proceeds of the sale of the first property to pay all or part of the cost of the second property.

Reverse Exchanges

In addition to traditional 1031 exchanges, we also do reverse exchanges, in which the investor purchases a property in the name of the qualified intermediary before relinquishing a property he or she owns.

The 1031 exchange only defers capital gains taxes; they still must be paid when the property is eventually sold. However, investors may be able to avoid capital gains taxes entirely by using certain estate planning techniques. For assistance with 1031 exchanges or estate planning, please contact an attorney at our law firm today.

From offices in San Mateo, the attorneys of the Law Offices of David G. Finkelstein represent clients throughout the San Francisco Bay area.