4 Things You Should Know About Exchange Property Tax

Exchange property tax allows you to exchange your property or investment asset for another without having to pay tax. You can exchange different investments or assets unlimited times and you still won't be required to pay tax. You will only pay tax when you finally sell the asset or investment for cash. The tax is usually referred to as capital gains tax. Here's  a good read about  1033 exchange , check it out! 

When exchanging assets, you are not required to pay taxes since the transaction is not taken to have involved any capital gains. However, there are some restrictions that apply to this rule. For example, if you are exchanging an asset with another one that is of a significant lower value, you may have to pay depreciating tax. This tax is usually calculated as ordinary income. When you want to exchange property or assets with others, remember the following:

Only business assets accepted
Exchange property tax does not govern transactions involving assets meant for personal use. Instead, it only applies for investment and business property. If you were hoping to exchange your residential home for another, property exchange tax will not apply here. This means you cannot exchange your residential home for another one. For vacation homes, there are a number of ways you can ensure the exchange you do falls under exchange property tax guidelines. However, the process is not straight-forward and you will need the help of an experienced tax professional. For more useful reference regarding  capital gains tax calculator , have a peek here. 

Some personal properties qualify
Generally, most people exchange real estate properties to avoid paying tax. However, in some situations, exchanges of other personal properties may also qualify. For example, if you have a high quality painting, you can swap it for another and take advantage of the provisions of the exchange property tax laws. However, keep in mind that you cannot exchange partnership interest or corporate stock.

You can exchange different properties
Most property exchanges are of "like kind". However, you can also engage the property for others that are not exactly the same. For instance, you do not have to look for a commercial building in exchange of the one you have. Depending on what you want, you are allowed to exchange the property with a strip mall, raw land or even ranch. The rules are liberal regarding the type of properties that are acceptable for exchange. You can also exchange one business for another

The exchange does not have to happen immediately
If you want to exchange a property, you will need a party whom to do the exchange with. However, finding a person with the same property like yours can be difficult. In this case, you can involve a third party and have the exchange carried out over a period of time. You can go to this site  http://www.ehow.com/personal-finance/tax-information/property-tax/ for more great tips!