Buying and selling real estate seems like a simple process and for most homeowners it is. One person wants to buy a home while another person wants to sell. Many who have bought, inherited or invested in real estate are now facing major risks when deciding how, when and why to sell without incurring huge tax liabilities.The federal government has in place a wonderful tool that allows most who own multiple properties to transfer ownership without the tax liability, while enjoying the potential gains associated with real estate investing.

There are as many reasons to seek a 1031 Tax Deferred Exchange as there are investors, but the fact is that completing such a property exchange can save you a significant amount of capital gains tax when you decide to sell your existing investment property and to acquire another one. Know as a 1031 Starker Exchange, the US Federal Government opened the door for a structured and time sensitive way for anyone who qualifies to be able to transfer ownership of real estate from one property to another without tax consequences normally associated in real estate sales and transfers.

After this initial most important step, usually performed with the assistance of a realtor or other expert in real estate matters, the seller would hire the assistance of a Tax Exchange company who’s attorney’s specialize in these kinds of transfers. Since the timing becomes a critical component for the initial sale and ultimate settlement of the replacement property, the realtor’s role in conjunction with that of the attorney will need specific targets of available replacement properties and locations as well as accurate marketing and evaluation of the property to be sold in the initial process.

Finally, as all transactions come together within the 180 window allowed by law, the seller creates a transfer of the selling property “in trust” with a third party who is usually the tax exchange company attorney. This simple but most critical step makes the actual transfer legal in order to make the tax benefit relief possible.

Investing in real estate is a very exciting and rewarding experience as long as you know what you are doing. There is nothing more nerve racking than trying to close your first deal and realizing that you missed something that is legally binding and the deal is void. This can be a devastating blow not only to your bank account but also to your real estate investing reputation. In fact if the setback is serious enough you may have trouble breaking back into the market.There are ways to avoid this happening to you. One of the ways is to have a lawyer on your side.

When you decide that you want to try your hand at flipping houses or doing any other kind of real estate investment remember to follow the rule “it is better safe than sorry” to elaborate, it is always better to have someone that knows what they are doing by your side than it is to go at it alone. In this case a lawyer on retainer is a good idea when you are dealing with all of the real estate legal forms. When you are flipping a house there a contracts that you will be held to and expected to abide by. All of these contracts and legal terms can get a little confusing if you are not trained to know what you are looking for.

While getting a lawyer seem like a pricey option think of how much worry and how many mishaps the lawyer is going to be able to save you from. From the moment that you find the property that you are looking to invest in or flip the legal forms begin flowing. If you do not know what you are doing all of these forms will confuse you quickly. A lawyer will be able to break down the forms and explain them to you in a way that you will better understand. The amount of time this will save you is truly priceless.