IRS warns real estate investors to beware of tax schemes targeting real estate investors. The schemes tend to be offered by financial firms that are not professional tax advisers but promise favorable tax savings through the improper use of like-kind exchanges. Sales pitches may encourage taxpayers to exchange non-qualifying vacation or second homes. Many promoters of like-kind exchanges refer to them as “tax-free” exchanges not “tax-deferred” exchanges. Taxpayers may also be advised to claim an exchange despite the fact that they have taken possession of cash proceeds from the sale.
IRS advisers investors to consult a tax professional or refer to to IRS publications for additional assistance with IRC Section 1031 Like-Kind Exchanges. Seek professional advice early, don’t wait until the deal is ready to close.
I am available to review the tax planning of a proposed real estate sale or exchange transaction.