Wakefield Exchange Corporation
provides secure tax deferred exchange services throughout New England.
It is run by a licesnsed attorney with 10 years experience in
residential, commercial and investment real estate. We provide our
customers with the highest quality services and customer care. We
pride ourselves on being professional, courteous and customer oriented.
Wakefield Exchange Corporation is a separate corporate entity from Liwo & Associates, P.C.
Did you know that capital gains tax on the sale of an investment property can be deferred?
A tax deferred exchange is an approved method to sell investment
properties (including land, income and commercial properties) and
acquire one or more like-kind properties while deferring federal and
state capital gains taxes. When the echange meets the criteria for the
Internal Revenue Service Code Section 1031, taxes are deferred
indefinitely.
Section 1031 exchanges are an excellent method of building wealth. Section
1031 allows continued deferral of taxes on subsequent exchanges, which
enables the owner to increase equity without the burden of capital
gains tax.
How it works. Basically,
the Section 1031 exchange is the sale of one investment property
followed by the purchase of another. If the proceeds from the sale of
one property are held by a "Qualified Intermediary," both properties
are of like-kind, and the exchange time period requirements are met,
then the exchange is deemed to be a continuation of the orginal
investment which does not trigger capital gains tax.
FREQUENTLY ASKED QUESTIONS
Why do I need a Section 1031 tax deferred exchange?
To
defer payment of capital gain taxes indefinitely, without penalty or
interest! Tax deferred exchanges allow the seller of investment real
property (whether it's a 40-story Boston high-rise or a three family
house) to defer the payment of capital gain taxes. Ordinarily, the
seller of investment property has to pay a capital gains tax once an
investment property is sold. Section 1031 of the Internal Revenue Code
allows a taxpayer to use the money from the sale of one investment
property to purchase another investment property. There are time
limits and filing deadlines to meet, but a Section 1031 exchange can be
a great way to protect your equity.
What is a Qualified Intermediary?
A Qualified Intermediary is the independent escrow agent necessary to handle the exchange of properties under Section 1031. Wakefield Exchange Corporation,
simplifies the exchange process for you by facilitating the "exchange"
of one investment property for another. A qualified intermediary must
be unrelated to the taxpayer and cannot be the taxpayers agent.
How does the exchange work?
The taxpayer sells Property A. Proceeds from the sale ARE NOT given to the taxpayer. The sale proceeds are paid to a Qualified Intermediary -- like Wakefield Exchange Corporation --that holds the proceeds in escrow. Within
45 days after the sale of Property A, the taxpayer must identify up to
three like-kind properties as potential replacements. The taxpayer enters into a contract to buy one of the three identitifed replacements (Property B). Taxpayer closes on the purchase of Property B within 180 days of selling Property A. Wakefield Exchange Corporation, makes sure that the proceeds from the sale of Property A are paid toward the purchase of Property B. The exchange works because the taxpayer never touches the sale proceeds. They are simply rolled over into another "like-kind" property.
When does the Capital Gains Tax get paid?
If
a tax-deferred exchange is properly done, capital gains taxes are paid
only when the taxpayer sells off a replacement property and pockets
the proceeds. Remember that, under current law, multiple tax-deferred
exchanges are allowed.
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