1031 exchanges are a challenging task to accomplish because the IRS has strict rules and regulations that can impact the validity of your transaction and increase the likelihood of having to pay the capital gains tax. One of the biggest regulations is the like-kind rule, which dictates that the replacement property’s value should be as much or greater than the sale price of the relinquished investment.
So what are your options if the cost of your next investment is lower than the relinquished property’s value? A 1031 improvement exchange allows you to make the necessary renovations and repairs to a property to enhance its value and meet stringent IRS regulations. However, this is a difficult strategy with a tight timeline. Partnering with a reputable qualified intermediary prevents delays and mistakes from impacting your exchange. The 1031 Exchange Intermediaries team has over three decades of experience with property improvement exchanges and leverages that knowledge to create a stress-free experience and reduce your tax liability.