Edited by Joseph Garnett, Jr. – Written by Mike Wolfe
If you like the 1031 Exchange, you will love the 170 Exchange™, also known as a Bargain Sale. You’ve probably heard of the 1031 Exchange. But, have you heard of the 170 Exchange? Let’s take a look at the specifics by comparing the 1031 Exchange and 170 Exchange 1031 Exchange. Also, we’ll explore information on how they may be able to maximize selling outcomes when used together.
Comparing the 1031 Exchange and 170 Exchange
Most commercial real estate brokers and their clients know the 1031 Exchange well. This exchange allows investors to sell existing property. Then, the seller can use the proceeds to buy new property without having to pay any capital gains tax. The IRS Section 1031 (a)(1) explains that the seller’s property must be exchanged for property of like kind. Also, the seller must hold the property for productive use.
“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.”
The IRS insists that all of conditions be met to qualify for a 1031 Exchange. Meanwhile, experts at Welfont coined the term The 170 Exchange. What happens in the bargain sale, which is the 170 Exchange, a seller sells a property to a charitable group at significantly under market value. The difference between the sale price and the assessed market value may be able to be written off as a tax deduction. Ideal for hard-to-sell properties, a 170 Exchange can be especially valuable in helping the seller maximize profit.
170 Exchange: Maximizing Seller Outcome
At Welfont, our experts may be able to assist you in pairing the well-known 1031 Exchange with the lesser-known 170 Exchange to maximize profit. If the rules properly followed, the 170 Exchange allows the seller to divest property held in a 1031 Exchange. Depending on the transaction specifics, sellers can cash in their chips and may be able to pay little to no capital gains tax.
Please visit www.welfont.com to learn more about how the 170 Exchange may be able to help you or to seek the help of tax professionals.