One of the most popular "tax deferring" strategies for real estate owners who are selling one property and acquiring another is the use of Section 1031 of the Internal Revenue Code. It is an effective way to defer paying income tax on capital gain generated by the sale of a property when you intend to reinvest the proceeds in a similar, "like-kind" property. Almost any kind of real property is considered "like-kind" with any other real property.

A recently enacted law closes what was considered a loophole in the Section 1031 rules. In some cases, owners of investment real estate have used the 1031 Exchange to swap their investment property for real estate that could be readily converted to an owner-occupied residential property. After the exchange, they made the property into their principal residence, lived in it for a couple of years, then sold it. Now the American Job Creation Act of 2004 has ruled that properties converted from a 1031 exchange property into a residence must be held and used as a principal residence for at least five years to qualify for the tax exemption. Otherwise, the basic tax-deferring benefits of 1031 exchanges remain the same.

Consult your tax advisor for more detailed information.

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Gina Donnelly
THE DONNELLY GROUP REAL ESTATE SERVICES
1256 W. Chandler Blvd. #19
Chandler, AZ 85224
Phone 1: 480-792-9700
Fax: 480-603-3603
ginadonnelly@NUMBER1EXPERT.com

Gina Donnelly is the Designated Broker for The Donnelly Group Real Estate Services and is one of the East Valley's top selling agents. She has sold dozens of homes in the area and knows the local amenities, schools and services. She is outgoing and energetic and champions her clients by defending and maintaining their best interests while pursuing their most ardent desires. This she does with a personal enthusiasm that comes from a real enjoyment of the real estate business. Her personal style though dynamic and outgoing is based on a foundation of trust. "We're dealing with a big financial and emotional investment," she says, "and I want my clients to have complete assurance regarding my character and abilities." "My experience allows you to focus on your move while I manage your home sale and everything it entails." From initial consultation to closing the deal, Gina represents your best interests. Her plan is for her clients to “ Come home in Style”