Tulsa Commercial Real Estate Experts: What are the most common Tax Traps associated with a 1031 Exch

Tulsa Commercial Real Estate Experts: What are the most common Tax Traps associated with a 1031 Exchange That I Should Avoid?

by U.S. SBA Entrepreneur of the Year & Cofounder of Fears & Clark Tulsa Commercial Real Estate Group - Clay Clark

The entire phrase "tax trap" indicates that the government is somehow trying to trick us into paying too much in the form of taxes, and I am not sure whether I 100% believe that. I am sure that government's tax code is an abomination and that is entirely too large and complex for the average person to understand. However, regardless of my belief on tax traps, that are a few tax traps to avoid when working on a 1031 Exchange.

Most of the cases that involved so-called "tax traps" relating to the 1031 Exchange involved farmers or real estate speculators who went out there a purchased huge amounts of commercial real estate or raw land for the purpose of subdividing, improving and selling. This sounds like a great idea to me. Now the issues related to condo conversions do not differ much from those that specifically apply to the speculators, developers and farmers. The Internal Revenue Code, Regulations and previous court decisions focus on the separation of speculators from developers and dealers whose sole focus is purchase, improve, develop and sell real property from those property owners who do not purchase the relinquished properties with the intent of subdividing, improving and selling off units of real estate. The deep thought and theory here is that the people who are in the actual business of selling their real property should be taxed as if the properties they own inventory. I completely disagree with this in everyway, but the because the government constantly overspends they have to come up with more and more ways to rationalize the incremental errosion of our freedoms with the increasing of our taxes. At the end of the day, here is the scoop. If you own a ton of property and you are considered to be property "dealer" then you cannot qualify for this program.

For more information about the 1031 exchange program, purchasing Tulsa commercial real estate, Tulsa commercial real estate, Tulsa commercial office buildings, Tulsa office buildings, Tulsa real estate, Tulsa office space, Tulsa commercial space available and Tulsa commercial investment properties please feel free to contact our expert team of commercial real estate professionals today at 918-481-2080. Or you can visit us online at www.FearsClark.com.