Basic Requirements of Exchanges
The IRS has certain prerequisites, rules and restrictions that must
be strictly adhered to when conducting a 1031 Exchange. Because of
this, you will need to follow six primary rules for your Exchange
to meet stringent IRS guidelines.
The principals of Exchange Accommodators are familiar with these
guidelines and have the experience it takes to conduct a successful
exchange. Because we are committed to examining every detail and keeping
you up-to-date with the process, you can rest assured that your Exchange
will be handled with the utmost care.
The regulations, court cases and IRS rulings that apply to your Exchange
are ever changing. It is important to choose a Qualified Intermediary
like Exchange Accommodators that understands these laws and carefully
monitors new legal developments.
Real Property Use
Both your old and new properties must qualify as investment
or business use. If both properties pass this test, you can exchange
nearly any type of real estate.
45-day Identification Period
You have 45 days from the closing of your sale to list the
properties you may want to purchase. There are no exceptions to this
deadline.
180-day Exchange Period
From the sale closing date, you have 180 days to close on
the purchase of one or more properties from the 45-day list. Again,
there are no exceptions to this deadline.
Qualified Intermediary (QI)
The IRS mandates you use a QI to prepare the legal documents
for your exchange. Because the QI must be independent, it cannot be
your friend, employee, broker, or even your accountant or attorney.
The QI also holds your money so that you do not have access to it.
Having constrained receipt would disqualify your exchange.
Proper Title Holding
You must purchase and take title to your new property exactly
as you held title to your old property. Consult with your CPA/Attorney
regarding title exchanges after the exchange.
Reinvestment Requirement
To defer all of your capital gain tax, you must buy a property equal
or higher in value than the one you sold. Also, you must reinvest
all of the cash proceeds from your sale and replace any debt on the
property sold.
