Can I really save money on Capital Gains taxes?
Most definitely YES!
How?
Very simple. Instead of selling your property held for business or investment,
Exchange it!!
I can't expect to find someone to want my business or investment property who has exactly what I want.
That's exactly right. That's why there is Internal Revenue Code section 1031. This Code Section allows you to "sell" your property and then under certain particular predetermined time elements and certain restrictions, locate that, or those, properties you wish to acquire. You then acquire it (them) using ALL of the equity you realized from the sale of your other investment property and not just the "after tax" equity you would have had available had you just "sold" it (them).
It is important that you know all the steps required by the IRS to take advantage of this tax deferment. You can see our FAQ page for answers to many questions. You MUST indicate your intent to do a IRC Section 1031 exchange well in advance of closing your "sale" escrow. Your intention must be indicated using certain phraseology in your original sale deposit receipt. You can see our Glossary for exchange terminology.
Be sure to contact your tax advisor, legal advisor, Qualified Intermediary, or qualified Real Estate Investment Broker to assist you in your planning to create a successful qualified 1031 simultaneous or delayed exchange.
Good luck and happy tax planning.
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