Article: Mechanism Of The 1031 Exchange
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Mechanism Of The 1031 Exchange
One of the very difficult thing to achieve in Europe is managing to create a real estate fortune. Why is it easier in the States ?
One of the most important reason are taxes. Indeed, in Europe any profit made on property is subject to heavy taxes. So on top of extremely high transaction fees (notary, lawyers, real estate agents, transfer taxes and so on), you have to pay a large chunk of your capital gain as tax.
In the states a wonderful mechanism exists and it helped support the real estate industry. This procedure originates in the beloved Internal Revenue Code, specifically in the section 1031. A 1031 exchange or Like kind exchange is defined as follows:
If you own an asset, generally some kind of real estate such as land or building and you...
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