Commercial real estate investors who don’t seek the advice of certified public accountants could be missing out on valuable tax savings according to a recent survey sponsored by Bayview Financial Exchange Services (also known as Bayview 1031).
The survey of randomly selected readers of the American Institute of Certified Public Accountants’ (AICPA) CPA Insider e-newsletter between February 8 and 22, 2005, found that clients do not tap their CPA’s knowledge of Section 1031 of the Internal Revenue Code. The majority of the 690 CPAs responding to the survey indicated they were familiar with the tax deferral benefits of Section 1031. Fewer than half, however, were not advising their clients to execute such transactions because their clients did not consult them until after the transaction is completed. Section 1031 allows buyers and sellers of commercial property to defer capital gains taxes by rolling the proceeds from a sale into another investment property of equal or lesser value.
Most CPAs can provide basic information on 1031 exchanges, as these transactions are called. Many can direct investors to qualified intermediaries, independent third parties recognized by the Internal Revenue Service as facilitators of 1031 exchanges.
“As tax experts, CPAs understand tax deferral strategies for commercial real estate transactions and can advise on 1031 exchanges,” says Stephen A. Wayner, vice president of Bayview Financial Exchange Services. “Many investors remain unaware of this profitable option without that kind of advice.”