Chicago businesses and individuals use 1031 exchanges as a tax deferral strategy when selling real and personal property held for investment or for use in a business. The Internal Revenue Code Section 1.1031 defers federal capital gains and recaptured depreciation taxes when replacement property is acquired within 180 calendar days of the old property sale.
The Certified Exchange Specialist on staff at Atlas 1031 has been providing 1031 exchange qualified intermediary services for professional advisers and their clients in and around Northeast Illinois and Chicago since 2003. Many of our clients are foreign non resident aliens and companies. Foreigners can defer US federal capital gains taxes but must follow the FIRPTA requirements when selling real estate.
1031 Exchange Properties
All 1031 exchange properties share common themes, characteristics following 1031 exchange rules. Intent and facts are similar. The intent is holding the real, tangible and intangible personal property for investment or for business use implying minimal personal use. Hold time is typically one to two years as a minimum to reflect intent to hold the property for investment rather than a flip for profit, though the shorter the hold time, the more substantial the facts should be. The asset is not considered inventory which is not eligible for 1031 consideration. If rental property, facts supporting an investment intent can be supported by including the property in a rental pool, itemize the property on Schedule E of the federal tax return and no more than fourteen overnights per year or 10% of the days rented annually for personal use. These are all facts supporting the intent consistent with the 1031 code. A partial list of 1031 exchange properties is as follows:
Each 1031 exchange is carefully managed depositing 1031 exchange proceeds from the sale of the relinquished or old property into non commingled, interest bearing accounts insured by FDIC. Either a qualified escrow account or personal identification number (PIN) is used requiring Exchangor authorization to disburse funds. Atlas 1031 maintains a $250,000 Errors and Omissions policy
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