The Best Ways to Keep the Ball Rolling for 1031 Exchange
People of the U.S. are interested in investing in mineral rights and real estate because they have understood that it is beneficial from several aspects. The like-kind exchange is also a legit option for the people, which is available for the real estate and mineral right investors. The real estate like-kind exchange also known as the 1031 exchange has been used widely for its benefits to defer taxations. The section 1031 gives you the opportunity to defer the capital tax gain if you reinvest the gain from the sale to another property that is similar to the old one. The ‘similar’ property exchange is how it earned the name ‘like-kind’ exchange.
There are several rules of real estate like-kind property exchange. You cannot reinvest on your home or something that costs less than the sold property. The gain and the investment cost should be the same or the latter should be greater than the former one. You cannot do it all your own. There will be a third party coordinator to monitor the entire process. You can have your own lawyer to represent yourself to the jury and close the case being compliant with all set of rules.
To be eligible for the 1031 exchange, you need to find the like-kind property within 45 days after the sale. If you want to defer tax for your capital gain, you need to show that you are going to invest the same or greater amount of money to another property. Thus the taxation can be deferred. Within 45 days, the new property on which you want to reinvest should be recognized. And within 180 days the replacement should be done.
Now, with the new technologies and the growth of exploration in the mineral industry, more attention is given to the transfer of mineral rights than the real estate like-kind exchange. The right in a property should also match here along with the property type. If the landowner is selling his property along with the mineral rights, the capital gain would be more than the property. In this case, only the value of the property would not be considered. The seller has to invest in a property where he will have the mineral right as well. In certain cases, the mineral rights also qualify the like-kind exchange. The royalty interest can also be used as the like-kind deal.
Learn all the options you have while deciding whether to sell your property or mineral rights. The professionals can help you out with the right guidance. With Ten31 Minerals, you can have that adequate knowledge to carry out the exchange process successfully.