Oct 5, 2016

Posted by in Business tips

Advantages provided by Delaware Statutory Trusts

Having a commercial space is quite an investment for you, because you have the possibility to use it in different purposes to earn money. But there are cases, when you consider that the space is not suitable for your needs anymore, and you would want to invest in another one. But in this case you would have to sell the existent one, and you would lose a part of the money, because you would have to pay some taxes to the state. Well, you can avoid this situation, if you apply for a commercial real estate exchange, which is one of the tools many commercial building owners are using, when they want to save money, but to also change their business building. Because this is the first time you are applying for this type of exchange, you have to be aware of some of the do’s and don’ts of the process, so take a look at the lines below.

Do’s of a commercial real estate exchange

The first thing you have to do when you consider the option of applying for this type of exchange is to understand what it implies. It is a process, which allows you to change your commercial property with another one, and in this way, you would defer the capital gains taxes. Other important thing you have to do is to find which types of properties qualify for the exchange, because some of them are not considered compatible with the process. Ask a professional in this case, to find more details about yours. You also have to understand the investment goals of this process, because you have to be sure that you can afford to keep your capital illiquid. Also you have to report to the IRS the change in the year you are doing it, and in this purpose you have to use the 8824 form.

Don’ts when applying for a 1031 exchange

So, there are some things you should not do, if you want to do a successful exchange. The main thing you do not have to do is to try to change one of your personal properties, because it would not qualify. The exchange is designed only for the investment properties you might owe. Also, you should not try to change the property with one which is not located in the U.S.A., because you should do it only within the states inside U.S.A. You do not have to take control of the case of the property you exchange, because if you do not use an intermediary in this case, you would have to pay the immediately taxes. Do not change your investment space with a cheaper one, because the money you would not use would be taxed. Do not forget to ask for professional help, because if you do not have experience you might do one mistake that would ruin your application. Also, so not forget to contact the intermediary, because its role is crucial in the exchange.