1031 Tax Deferred Exchange and Northern Virginia Property Investors

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Let's talk about the 1031 Tax Deferred Exchange. As an investor, you can use this to defer taxes on the sale of investment properties. This is also known as a Like-Kind Exchange. If you sell one investment property and buy another, the gains you had on the first property can be deferred.

This is an involved process with a few nit-picky things to know about. Make sure you work with someone who understands all the rules! For example, if you sell your first investment property, you have 45 days to identify the next property that you will ultimately purchase.

There is also a three property rule. You can identify three properties within those 45 days, and then you have to buy within 180 days.

Additionally, there's the 200% rule, which is a great option if you want to purchase more than three properties. This allows you to purchase four or more properties as long as the value of those properties does not exceed 200% of the value of the property being sold.

Finally, there is the 95% exception. If the value of the properties you want to purchase does exceed 200%, then you have to purchase 95% of the properties you identified.

Now, I tried to break down this complex process into the simplest terms. I'm happy to answer any of your questions about it! It can be complicated and difficult to understand at first. If you have any further questions and want to learn more details, give me a call or send me an email. I would be happy to help you.

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