Tax relief follows recent hurricanes

October 2005

 

If you're thinking of selling a piece of business or investment property, you should know about one tax provision that could let you postpone taxes on the transaction, either temporarily or permanently, depending on the circumstances.

The tax provision is "Section 1031," and the technique is a tax-free or tax-deferred exchange. You can trade a business or investment property for another piece of "like-kind" property of equal or greater value and postpone paying tax until you dispose of the new property.

The rules are very strict and you must follow them precisely. You must replace real estate with real estate and personal property with personal property. Replacing an apartment building with commercial space, a strip mall, or even undeveloped land all qualify. You can't use an exchange on certain types of assets, such as business inventory, accounts receivable, stocks and bonds, and your personal residence.

A tax-deferred exchange can save a significant amount of taxes and is certainly worth considering in many situations. With proper planning and professional assistance, you may be able to trade highly appreciated property into another property without having to cut out a slice for the taxman. For more information or assistance, give us a call.

Have you visited our web site lately? There is a lot of useful information in the reference section, and a collection of prior tax tips. www.cpa-mm.com.

Maniar, Miller & Wechsler, LLC

2855 N. University Drive, Suite 600
Coral Springs, FL 33065
Phone: 954-75 CPA-MM (752-7266)

Fax: 954-345-0115
info@cpa-mm.com