Agresti Realty LTD

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1031 Exchanges

Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.

Section 1031 of the U.S. Internal Revenue Code allows investors to defer capital gains taxes on the exchange of like-kind properties. 1031, or tax-deferred, exchanges hold great advantages for investors. TIRC Section 1031, allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes. IRC Section 1031 (a)(1) states:

“No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”

To understand the powerful protection a 1031 exchange offers, consider the following example:

  •  An investor has a $200,000 capital gain and incurs a tax liability of approximately $70,000 in combined taxes (depreciation recapture, federal and state capital gain taxes) when the property is sold. Only $130,000 remains to reinvest in another property.
  • Assuming a 25% down payment and a 75% loan-to-value ratio, the seller would only be able to purchase a $520,000 new property.
  • If the same investor chose to exchange, however, he or she would be able to reinvest the entire $200,000 of equity in the purchase of $800,000 in real estate, assuming the same down payment and loan-to-value ratios.

As the above example demonstrates, exchanges protect investors from capital gain taxes as well as facilitating significant portfolio growth and increased return on investment. In order to access the full potential of these benefits, it is crucial to have a comprehensive knowledge of the exchange process and the IRC. For instance, an accurate understanding of the key term like-kind – often mistakenly thought to mean the same exact types of property – can reveal possibilities that might have been dismissed or overlooked. Asset Preservation is your resource to obtain accurate and thorough information about the entire exchange process.

What property qualifies for a Like-Kind Exchange?

Both the relinquished property you sell and the replacement property you buy must meet certain requirements. 

Both properties must be held for use in a trade or business or for investment.   Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment.

Like-kind property is property of the same nature, character or class.  Quality or grade does not matter. Most real estate will be like-kind to other real estate.  For example, real property that is improved with a residential rental house is like-kind to vacant land.  One exception for real estate is that property within the United States is not like-kind to property outside of the United States.  Also, improvements that are conveyed without land are not of like kind to land.

As you can see, Like Kind Exchange can be complicated and we recommend discussing this option with you Tax Professional.  If you decide that this 1031 Strategy will help you achieve your Real Estate Investment Goals, Agresti Realty Ltd can help you sell and purchase a new property.

Talk To Joanne Agresti Right Now!

Have a question? Give me a call at (201)-420-9400, or you can click my photo for more options to call or email and I will contact you right away.

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Contact Agresti Realty LTD

201-420-9400
info@agrestirealty.com

84 Washington St. 2nd fl
Hoboken, NJ 07030
License #: 8331851

Recent Testimonials

Highly likely to recommend!

My husband and I don’t have enough positive things to say about Joanne. She is simply and truly the best real estate agent we have ever worked with. She is extremely knowledgeable in all areas of real estate and went above and beyond in all areas of helping us find and purchase our home. Whether
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My husband and I don’t have enough positive things to say about Joanne. She is simply and truly the best real estate agent we have ever worked with. She is extremely knowledgeable in all areas of real estate and went above and beyond in all areas of helping us find and purchase our home. Whether it was her constant availability (calling and checking in with us while she was on vacation), her taking it upon herself to go to town hall to check out zoning and tax records for a potential property, her ability to give sound advice and referrals, or her working with us through the entire sales and closing process. She was always one step ahead of where things needed to be and always kept us on track through the closing process (which can be stressful)! Whether it was calling to check in on our lawyer, our banker, our inspection…or stepping in for us when we couldn’t meet a plumber at the potential new home to get an estimate on a repair. Whatever it was she was always there and she was there willingly! Her level of attention to detail and customer service is unparalleled. And on top of it all, she is a wonderful, pleasant person! We’ve learned from experience and will only use Joanne going forward. Thank you, Joanne!

Read more “Highly likely to recommend!”

Highly recommended Hoboken Realtors! 110%

Long story short, Joanne is a fantastic Hoboken Realtor. My wife and I have two young children and have been renting basically because we did not know if we wanted to continue living in an apartment or instead, get a house. Our landlord graciously gave us 1 day notice that he was selling our rental
…
Long story short, Joanne is a fantastic Hoboken Realtor. My wife and I have two young children and have been renting basically because we did not know if we wanted to continue living in an apartment or instead, get a house. Our landlord graciously gave us 1 day notice that he was selling our rental out from under us, however, which forced our hand to decide quickly. My wife immediately began scouring apartment listings. About two weeks into our 5 or 6 week search we happened to meet Joanne via a cold call (from us to her). I remember to a T our first meeting – Joanne brought us to a brownstone that my wife wanted to see and I said (to my wife’s embarrassment) that I hated the place and that it was a waste of valuable time. Unlike many people I’ve worked with in the past, Joanne immediately began thinking about why my wife and I weren’t on the same page and began taking us around to narrow in on exactly what we were looking for. She told us when a bid was a good idea, when things would not work, who we should trust and what we should consider. When we finally found the place that we purchased, Joanne was there every step of the way to push where the seller needed to be pushed and to keep us sane when we (as first time buyers) were overwhelmed. Every single step of the way Joanne treated us like true friends. We owe our Hoboken Condo (and sanity) to Joanne and would recommend her 110%.

Read more “Highly recommended Hoboken Realtors! 110%”

Dan and Jordyn
Hoboken

5 star service!!!

Your experience, knowledge, commitment and expertize with regards to the sale of my mom’s home was a wonder!…You know your stuff …who sells a house in 5 days!!!????..for significantly over asking price!!!!  Thank-you again.  

Constance
Monmouth County

Always advised and represented us with the utmost professionalism and candor

We have bought and sold investment real estate in the Hoboken/Jersey City area for over 20 years, and Joanne Agresti has been the only broker with whom we have worked during that period. She has always advised and represented us with the utmost professionalism and candor, resulting in many successful purchases over the years. In
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We have bought and sold investment real estate in the Hoboken/Jersey City area for over 20 years, and Joanne Agresti has been the only broker with whom we have worked during that period. She has always advised and represented us with the utmost professionalism and candor, resulting in many successful purchases over the years. In addition, her unparalleled market insight and ability to navigate the playing field have proven invaluable in helping us to evaluate potential properties and determine the best course of action. We cannot speak more highly of her, and look forward to continued success as she guides us through our next 20 years of investing in the real estate market.
-K and J Murray

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Mr & Mrs. Murray
Jersey City

Joanne has been my “go to” realtor in Hoboken for my last 10 years

Joanne has been my “go to” realtor in Hoboken for my last 10 years in Hoboken. She has been responsible for 5 transactions, helping me buy and sell homes in both “buyer” markets as well as “seller” markets. As a seller, she has aggressively marketed my homes and consistently met my expectations in terms of
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Joanne has been my “go to” realtor in Hoboken for my last 10 years in Hoboken. She has been responsible for 5 transactions, helping me buy and sell homes in both “buyer” markets as well as “seller” markets. As a seller, she has aggressively marketed my homes and consistently met my expectations in terms of timeframe and asking price. As a buyer, Joanne has found multiple homes for me that were “perfect” at various stages in my life. She is knowledgeable and personable and a pleasure with which to work. If you are planning to buy or sell in the Hoboken area, I highly recommend Joanne Agresti!
-Erin Byron

Read more “Joanne has been my “go to” realtor in Hoboken for my last 10 years”

Erin Byron
Hoboken

Exceptionally knowledgeable, down to earth, kind, and patient

We have worked with a few real estate agents in the past, but ever since our first encounter with Joanne, we knew that she was vastly different from the others. She was exceptionally knowledgeable, down to earth, kind, and patient. And trust us, we saw numerous places until finding the home that we loved, but
…
We have worked with a few real estate agents in the past, but ever since our first encounter with Joanne, we knew that she was vastly different from the others. She was exceptionally knowledgeable, down to earth, kind, and patient. And trust us, we saw numerous places until finding the home that we loved, but Joanne’s persistence and diligence enabled us to make sure that we found a home that met all of our criteria. She always gave her expertise and opinion, and never pressured us to make a decision. Finding a home that we loved, in addition to finding a sound investment was essential to us, and as a real estate investor herself, she was able to provide feedback and guidance on both aspects. Joanne was not just an agent to us, we trusted her completely and she was a friend to us as well. There is no one that we would recommend more highly than Joanne. We are grateful for all of her help and support by utilizing so much of her time to make sure that our needs were met, and that we were content and confident with our important life decision.
-Jennifer and Brian, from Hoboken, New Jersey

Read more “Exceptionally knowledgeable, down to earth, kind, and patient”

Jennifer & Brian
Hoboken

Agresti Realty helped sell our home!

Joanne is very professional and dedicated to her clients. She managed to find a house for our growing family and sell our old house in a very competitive market. She addressed all our requests and promptly answered all our questions and concerns. We highly recommend working with Joanne.

Mr & Mrs. Nelson
Union City

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