Thursday, July 20, 2006

Contract Exchanges, What are they?

Tax strategies are always evolving. I enjoy keeping up with all the latest methods to help clients save money and taxes. This week I thought I'd pass along a great article by a colleague I respect. Enjoy!

Contract Exchanges: A Money-Saving Shortcut for a Turbulent Market

By Stephen A. Wayner, Esq., CES

Contract exchanges have recently become a hot topic among tax professionals, because many investors desire to cash in on the built in gains from the real estate market. Now, sensing possible dwindling future returns over the paper appreciation already earned, real estate investors want to lock in the gains from their hot investments such as condominium development contracts, and move into less high-flying, high-risk real estate holdings.

A “Contract Exchange” is the tax-deferred exchange of:-The Buyer’s ownership in a Sales Contract on real property, for different real property, or for a contract or option on different real property; or -The Option Holder’s exchange of an Option to purchase real property, for different real property, or for an option or contract on different real property. Essentially, a contract exchange is an exchange of an open option to purchase, or an open Sales Contract, rather than an exchange of the underlying real estate itself.

For the rest of the article, click the link below.

1031 Exchange News


ps. My new and improved sites are almost complete. I hope to be launching them with my next post.

Paula Straub
SaveGainsTax
askpaula@savegainstax.com