Tax Deferred Exchanges

It is possible to effectively “sell” real or personal property held for investment without incurring an immediate capital gains tax on the profit realized. The mechanism for accomplishing this is a tax deferred or “Starker” exchange and Lakeside Bank is now acting as a qualified intermediary (QI) to facilitate these transactions.

Briefly, this is how it works. The seller and buyer of property sign a contract with the seller assigning his rights under the agreement to the QI. When the deal closes, the sale proceeds do not go to the seller but to the QI which holds them until the seller tells it what property he intends to acquire (which he must do within 45 days) and actually closes on the purchase of replacement property (which he must do within 180 days). The QI then releases the funds to make the purchase.

If all of the rules are carefully followed, the Internal Revenue Service will treat the transaction as a qualifying exchange and not consider it a taxable event.

Why A Tax Deferred Exchange?

Anyone owning substantially appreciated investment property should seriously consider utilizing a deferred exchange when the time comes to sell it, and anyone considering a tax-deferred exchange should call Lakeside Bank.

Download a copy of Lakeside Bank's Starker Exchange brochure.

Download Lakeside Bank's Tax Deferred Exchange forms:

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