1031 Exchange

1031 Exchange – What you need to know

1031 Exchange InformationA 1031 exchange allows you to defer the capital gains tax due on the sale of a piece of real property by rolling the gain into any other type of real property. A qualified intermediary must complete the 1031 exchange and there are very specific rules that must be adhered to.

The total capital gains tax calculation as of 2013:

  • Taxation on depreciation recapture at 25%
  • Federal capital gains taxes at 20% (or 15%)
  • 3.8% Medicare surcharge tax on net investment income
  • State tax rate (0% - 13.3%)

Medicare and Federal Capital Gains tax depend on your taxable income

...

Single

Married

Cap Gains

Medicare

Combined Rate

$0 - $36,250

0 - $72,500

0%

0%

0%

$36,251 - $200,000

$72,501 - $250,000

15%

0%

15%

$200,001 - $400,000

$250,001 - $450,000

15%

3.8%

18.8%