Like Kind Exchange Explained

Internal Revenue Code allows a real estate investor of income real estate to exchange income real estate and defer paying federal and state capital gain taxes (20%+ applicable state taxes) in the event that they purchase a like-kind income real estate. A tax-deferred exchange is a method by which a real estate investors trades one or more relinquished income real estate for one or more replacement income real estate of like-kind, while deferring the payment of federal income taxes and some state taxes on the transaction.

Completing a like kind exchange with a tenant in common interest ownership in an income real estate allows real estate investors not only to defer their capital gains taxes, but to also upgrade their income real estate into larger, institutional-grade income real estate. Essentially, like kind exchanges allow real estate investors to use all of the proceeds from their sale as leverage to gain access to more valuable income real estate.

If you are thinking of transferring any income real estate, contact us today for more information on like kind exchanges. A like kind exchange permits like kind real estate real estate investors to sell an income real estate and defer tax payments by reinvesting the proceeds into a like-kind like kind real estate or income real estate. A tenants in common is a form of ownership that permits participants to enjoy the rewards of income real estate ownership without participating in the ongoing management of an income real estate. A tenant in common exchange yields an inherent interest in income real estate and offers several benefits as a qualified like kind exchange.

Performing a like kind exchange allows real estate investors to use all of the proceeds from the initial sale of income real estate as leverage for entering into more lucrative income real estate deals. The advantages of entering into a tenant in common are increased cash flow and diversified investment portfolios while deferring capital gains taxes at the same time.

If you recently sold an income real estate or you’re considering selling a current income real estate, we can match you with a like kind like kind advisor that can assist you in facilitating the exchange process.