BASICS: the 1031 exchange process

  1. Investment Property:  Both your “old” and “new” properties must qualify as investment property.
  2. 45 Day Identification Period: You have 45 days from the closing of your sale to identify the properties you are interested in buying.
  3. 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.
  4. Qualified Intermediary: The IRS mandates that you use a Qualified Intermediary to prepare the legal documents for your exchange. The Qualified Intermediary also holds the 1031 exchange money.
  5. Proper Title Holding: You must purchase and take title to your new property exactly as you held title to your old property.
  6. Reinvestment Requirement: To defer all of your capital gain tax, you must buy a property equal to or higher in value than the one you sold. You must also reinvest all of the cash proceeds from your sale.

the BASICS is a series of short and simple blog posts written by Steve Hollatz Esq. that gives a bullet-point list of key points to a subject matter.  this post is not intended as legal advice and reading this post does not create a lawyer / client relationship.  it is provided for information purposes only.  contact your lawyer for more information.


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