Exchange Explained

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

Completing an exchange with a TIC interest ownership in a commercial property allows property investors not only to defer their capital gains taxes, but to also upgrade their commercial property into larger, institutional-grade commercial properties. Essentially, 1031 exchanges allow property investors to use all of the proceeds from their sale as leverage to gain access to more valuable commercial property.

If you are thinking of transferring any commercial property, contact us today for more information on 1031 exchanges. An exchange permits 1031 property property investors to sell a commercial property and defer tax payments by reinvesting the proceeds into a like-kind 1031 property or commercial properties. A tenants in common is a form of ownership that permits participants to enjoy the rewards of commercial property ownership without participating in the ongoing management of a commercial property. A TIC exchange yields an inherent interest in commercial property and offers several benefits as a qualified exchange.

Performing an exchange allows property investors to use all of the proceeds from the initial sale of commercial property as leverage for entering into more lucrative commercial property deals. The advantages of entering into a TIC are increased cash flow and diversified investment portfolios while deferring capital gains taxes at the same time.

If you recently sold a commercial property or you’re considering selling a current commercial property, we can match you with a 1031 broker that can assist you in facilitating the exchange process.