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 Specializing in High Cash Flow, Low Management, 1031 Exchange Replacement Properties
Phone: (503) 281-0195 / Toll-free: (866) 401-1031Fax: (503) 281-5266 /  |
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| The 1031 Exchange | |||
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Under IRC 1031, a taxpayer can sell an investment property (the "Relinquished Property") and reinvest the proceeds in another investment property (the "Replacement Property") without triggering taxes. IN OVERVIEW, these are the Essential Requirements of a fully tax deferred 1031 Exchange of Investment Real Estate: 1. Property must be "Like Kind" and held for investment purposes. This means any real estate held for investment must be replaced with any real estate held for investment. Real estate leasehold estates with a remaining term of at least 30 years are considered real estate. Rental houses, apartment buildings, offices, ranches, commercial buildings and Tenant-In-Common Interests held for investment purposes can be freely exchanged and meet this "Like Kind" requirement. Examples of assets which are not "like kind" with investment real estate are personal property, inventory, and securities. 2. 45-day Identification, 180-day Acquisition Requirement. Within 45 days after the "sale" of the Relinquished Property, the Taxpayer must "identify" a limited number of Replacement Properties and within 180 after the "sale", Taxpayer must have acquired qualifying Replacement Property. 3. Taxpayer may not have actual or constructive use of sale proceeds. This requirement is usually met by having a "Qualified Intermediary" hold the sale proceeds and use those proceeds to acquire the Replacement Property, which is then given to the Taxpayer in "exchange" for the Relinquished Property. 4. Taxpayer must trade equal or up in value and equity. Taxpayer must use all sale proceeds from the Relinquished Property to purchase the Replacement Property of equal or greater value than the Relinquished Property. Functionally, this means the Replacement Property will have at least as much debt at the Relinquished Property had. Meeting the "paperwork" requirements of a 1031 Exchange is relatively straightforward. Identifying and securing appropriate Replacement Property within the stated timeline is usually a taxpayer's greatest challenge. We can help. The Tenant-In-Common Replacement Properties offered by FOR1031 and highlighted on the home page provide NNN leased, passive, qualifying replacement property for 1031 Exchanges. Contact us us for details. |
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