Forward 1031 exchanges offer a wide range of benefits to investment property owners in South Dakota. But many taxpayers don’t know exactly how 1031 exchanges work or why they should consider one.
How Does a Forward 1031 Exchange Work?
A forward exchange is the most common type of like-kind exchange. Here’s a quick breakdown of the forward exchange process:
- You sell your like-kind relinquished property. This must be a real property held for investment or business purposes.
- Within 45 days, you identify the replacement properties that you wish to exchange into. This 45 day identification period begins when you sell your relinquished property.
- Within 180 days from the sale of your relinquished property, you reinvest your sales proceeds into a like-kind replacement property.
When done correctly, this process allows you to defer capital gains taxes that would have otherwise gone to the government and keep those proceeds compounding in a continued investment property.
Tax Benefits of a South Dakota Forward Exchange
Other than tax deferral, there are numerous benefits of a forward like-kind exchange. As long as your property is like-kind and held for a qualifying purpose, you can exchange between different industries and geographical areas. For example, you could sell a duplex in Sioux Falls and exchange it for a retail space in Rapid City. Forward exchanges are a great vehicle for moving capital around where it’s needed.
Get Help With Your South Dakota 1031 Exchange
Get the help you need with your South Dakota 1031 exchange by contacting the team at CPEC1031, LLC. Our qualified intermediaries have more than twenty years of experience helping clints through all types of 1031 exchanges in South Dakota and across the country. Reach out to our 1031 professionals today to learn more about the many benefits of section 1031 and get started with your South Dakota like-kind exchange.