Tax free exchanges (1031)
If you are selling equipment for capital gain, you may be
eligible to defer taxes by using a 1031 exchange (Internal Revenue Code §1031),
also known as a "Tax Free" exchange. Through a Tax Free exchange,
you can save thousands of dollars in income taxes when selling
a piece of equipment and buying another, similar piece of
equipment.
Normally, a construction equipment owner would pay federal
income tax on the gain from selling a piece of equipment.
For example, a taxpayer in a 30% tax bracket selling a piece
of equipment for a $20,000 gain would owe approximately $4,500
in federal income taxes on that sale. Without a Tax Free exchange,
this taxpayer would now have only $15,500 in their pocket
to apply to the purchase of another piece of equipment.
With the tax-deferred exchange, however, a construction
equipment owner can defer ALL federal income taxes on the
sale of a piece of their equipment when they buy a similar
piece of equipment within a specific time period and when
they use a Qualified Intermediary.
To find out if you can have more cash available to invest
in replacement equipment by qualifying for a Tax Free exchange,
you can:
- Check with your accountant
- Learn more about Tax Free Exchanges at www.1031.org
- Call IronPlanet Customer Care at 888-433-5426.
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888-433-5426
1-888-433-5426