Estate Planning for Heirs

If a taxpayer has done a 1031 Exchange in the past, they will have deferred taxes due upon the sale of this property. If the taxpayer were to perish, their heirs will inherit the property with a stepped-up basis. All of the gain in that property disappears upon the taxpayer’s death.

If the heirs were to now sell this property, there would be no capital gains due, as opposed to what the taxpayer would have paid if they would have sold without an exchange before their death.

The 1031 Exchange is an important tax planning tool for real estate investors.

For more information, please reach out to your tax professional for specific questions or contact the specialists here at Security 1st Exchange for assistance.

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Here at Security 1st Exchange we focus on your goals utilizing a 1031 Exchange. When you have questions, we have answers. Get started today.

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Basics of a 1031 Exchange

To structure a 1031 Exchange property under I.R.C. Section 1031, there are some basic requirements that a taxpayer must meet.

Closing Costs

There are always questions from taxpayers as to which closing costs can be paid with sales proceeds when doing a 1031 Exchange. This article provides some overall guidance on the topic.

1031 Disclosure

The IRS requires that if any party to a transaction wishes to do a 1031 Exchange, all parties to the closing are made aware. The best place to do this is in the purchase and sale agreement.

Identification Rules

Section 1031 requires that a taxpayer doing an exchange identify their replacement property while following certain rules.