A key topic that should be very important to real estate investing professionals is that of 1031 tax exchanges. If you are really serious about investing in real estate it will benefit you to study and learn the 1031 exchange rules in depth. This way you will be investing with the know how to get the best tax deferrals.

The most important thing to know about 1031 exchange rules are the deadlines. You must purchase a replacement property within one hundred and eighty days after the sale has been registered or before the next filing deadline. But there is also a forty five day identification period in which time you must use one of three methods to identify properties that you are considering for exchange.

To maximize your tax deferrals, all of the cash from the sale of the property must be reinvested into the new property. The 1031 exchange rules state that you cannot use proceeds from the sale to pay for expenses that are not part of the exchange. To get the maximum tax benefit from these expenses you should handle them on a separate part of the settlement and footnote them and write a separate check to the buyer.

If you live in a different state to where the property is sold, many states mandate that the closing agent or real estate agent must withhold a percentage of the sale price to make sure that the state receives any tax revenue due, because tracking down these non residents later can be very difficult.

The sale of property by a foreigner is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). This act requires that the purchaser of a property withhold ten percent of the sales price under certain circumstances. Waiver rules may vary by state, so familiarize yourself with what is allowed in your location.

You will use a qualified intermediary to complete the required paperwork and follow the 1031 exchange rules. Do a search on the Internet and you will find a lot of data regarding 1031 exchange information. The Internet is also a resource for finding a qualified intermediary for your state.

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