Chicago real estate investors: how will tax law affect your profits?

Chicago real estate investors have made quite a time of taking the profits from one venture and throwing them immediately into another. Sun-Times columnist Terry Savage examines the issues surrounding what to do with those Chicago real estate profits and how to minimize your tax risk.

Chicago real estate investors will probably be interested in the 1031 exchange section of the federal tax code. This rule allows the profits from the sale one property to be rolled directly into the next, tax-free, provided that the new property is identified within 45 days of the sale of the first, and that the transaction is completed within 180 days.

People who choose to hold onto their Chicago real estate for at least two years are further allowed to exclude the first $250,000 of the gains from the sale of the Chicago real estate.