Sandy Springs Georgia Tax Free Exchange Package

State:
Georgia
City:
Sandy Springs
Control #:
GA-P064-PKG
Format:
Word; 
Rich Text
Instant download

Description

The Tax-Free Exchange Package contains essential forms to successfully complete a tax-free exchange of like-kind property.


This package contains the following forms:



(1) Exchange Agreement

(2) Exchange Addendum

(3) Certification Of No Info Reporting On Sale Of Exchange

(4) Like-Kind Exchanges

(5) Sale of Business Property

(6) Personal Planning Information and Document Inventory Worksheets


Detailed Information on each form:


1. Exchange Agreement - This form is used to establish the intent to enter into an exchange agreement and to otherwise qualify the contemplated transactions under the qualified intermediary safe harbor.


2. Exchange Addendum - In this form, the parties amend an existing contract to buy and sell real estate and agree that the Exchanging Party's rights under the contract are assignable prior to closing to structure an exchange of the property under Section 1031. The Cooperating Party agrees to reasonably cooperate in such exchange with the Exchanging Party.


3. Certification Of No Info Reporting On Sale Of Exchange - Complete this form to determine whether the sale or exchange should be reported to the seller, and to the Internal Revenue Service on Form 1099-S, Proceeds From Real Estate Transactions.


4. Like-Kind Exchanges - This form is used to report each exchange of business or investment property for property of a like kind to the Internal Revenue Service.


5. Sale of Business Property - This form is used to report gains, losses and recapture amounts from the sale of business property and involuntary conversions.

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FAQ

Ownership. Taxpayers must have owned this home for at least 24 out of the past 60 months (put another way, at least two years out of the last five). These months do not have to be consecutive.

Tax-free exchanges refer to those instances enumerated in Section 40(C)(2) of the National Internal Revenue Code (NIRC) of 1997 that are not subject to Income Tax, Capital Gains Tax, Documentary Stamp Tax and/or Value-added Tax, as the case may be.

Since 1921, Internal Revenue Code 1031 has encouraged investment and business property owners to trade their properties to avoid paying capital gains tax. Taxwise, a qualified tax-deferred exchange is viewed as one continuous investment. There are at numerous reasons for tax-deferred exchanges.

Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free. The exchange can include like-kind property exclusively or it can include like-kind property along with cash, liabilities and property that are not like-kind.

Example of a Tax-Free Exchange A taxpayer exchanges a medical office building worth $2 million and with an adjusted basis of $1.8 million for a similar building worth $2.1 million. The taxpayer pays the other party $100,000 in addition to the property given up.

Known as a like-kind exchange, it only works if you sell the investment property and use the proceeds to buy another, similar property. You're basically putting off capital gains tax indefinitely; as long as you keep putting the sale of the proceeds into another investment property, you can avoid capital gains taxes.

Like-kind exchanges must be reported on your tax return for the year the exchange is made. Exchanges of investment property (capital assets) are reported on Schedule D of Form 1040.

A 1031 exchange gets its name from Section 1031 of the U.S. Internal Revenue Code, which allows you to avoid paying capital gains taxes when you sell an investment property and reinvest the proceeds from the sale within certain time limits in a property or properties of like kind and equal or greater value.

2021 Georgia 1031 Exchange Guide The IRS allows Georgia investors to sell rental properties, business properties, and land that was purchased for investment purposes and defer all capital gains taxes via IRC Section 1031.

Home sales are tax free as long as the condition of the sale meets certain criteria: The seller must have owned the home and used it as their principal residence for two out of the last five years (up to the date of closing). The two years do not have to be consecutive to qualify.

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Sandy Springs Georgia Tax Free Exchange Package