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A key topic that should be very important to real estate investing professionals is that of 1031 tax exchanges. If you are really serious about investing in real estate it will benefit you to study and learn the 1031 exchange rules in depth. This way you will be investing with the know how to get the best tax deferrals.

The 1031 tax exchange rules need to be followed closely. Deadlines are very important. You are required to buy new real estate by 180 days prior to registration of the sale and prior to the next filing deadline. Another catch is that there is a 45 day identification time period for you to decide which of three methods you want to use to mark properties you are interested in for exchange.

In order to increase your tax deferrals, all money from the sale of your property ought to be reinvested directly into a new property. The 1031 tax exchange rules explicitly explain that one cannot apply proceeds from this sale to pay off expenses that are not involved in the exchange. In order to obtain the maximum tax benefit out of these expenses, one should manage them separately in the settlement and include a footnote, then write a separate check to your buyer.

If you happen to reside in a different state from where the property is, be aware that some states mandate that your closing agent or real estate agent is legally obliged to hold back a percentage of your sale price in order to ensure that the state gets any tax revenues that it is due, given that hunting down such non-residents at a later date becomes increasingly difficult.

For foreigners the real property tax act that was enacted in 1980 requires the payment of at least a ten percent withholding of the sales price. Depending on which state you are in this requirement may be waived, so it is wise to check the laws of the state your in.

You must use a qualified intermediary who completes all the necessary paperwork and filing and must adhere to the 1031 tax exchange rules. There are many places on the internet where you can find 1031 exchange information and you can even find qualified intermediaries in your state.

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If your business is investing in real estate, it is important that you make yourself familiar with the 1031 exchange rules. These rules govern the taxes around gains from the sale of real estate. According to the 1031 exchanges, if the proceeds from one sale are invested in another qualifying sale within a certain timeframe, substantial tax savings may be realized. The rules are very specific, and if they are not followed, the benefits will not be available to you. Study the 1031 tax exchange information and make sure you agent also is familiar with the rules.