The proposed regs under Section 199A left many taxpayers and advisors scratching their heads as to the impact it would have on those taxpayers looking to complete a tax-deferred exchange under Section 1031. One interpretation of the proposed regs could have meant that taxpayers would have to choose between the benefit of the 1031 exchange or Section 199A, but they could not enjoy the benefits of both.
The proposed regs would have inadvertently penalized an individual or pass-through entity doing a 1031 exchange based on how it was proposing to define the unadjusted basis immediately after acquisition (UBIA) of the replacement property.
Thankfully, the final regs have provided much-needed clarification that has resulted in a win for those individuals (or pass-through entities) looking to take advantage of the benefits of both the 1031 exchange and section 199A deduction.
Be sure and check out our resources to understand the entire process of 1031 exchanges. We are expert QI’s and can clearly explain the issues involving the 1031 exchange timeline and process that must be followed. Additionally, investors are often interested in learning about the advantages of exchanges beyond the potential for tax savings.
Our team of experts is ready to hear about your situation and answer any questions you have. Contact us today to learn how Midland 1031 can help you.