THE 1031 TAX DEFERRED EXCHANGE
If you own property that you are considering selling, you may want to investigate the 1031 tax deferred exchange. By utilizing this process authorized by the IRS, you may defer payment of capital gains taxes that would normally be due upon the sale of your property, by reinvesting the equity in another similar property. Here are some basic guild lines:
1. You must “declare” your intention to utilize this exchange prior to selling your property.
2. Once the property sells, the funds are held by a third party (CPA, attorney, title company). You have no access to the funds.
3. You have 45 days from the date of your sale in which to identify the property you wish to purchase with the proceeds from your initial sale.
4. Attorneys do not always agree on how many properties you may identify. Some say one others two or more. Take your attorney’s advice.
5. You must use an attorney other than your regular attorney. It must be an arms length transaction.
6. You have 180 days from the closing of the sale on your initial property to close on the identified property.
7. Contact an attorney experienced in these transactions.
8. Several attorneys in our area specialize in this type of transaction. Contact me if you need help in locating one.