- Investment Property: Both your “old” and “new” properties must qualify as investment property.
- 45 Day Identification Period: You have 45 days from the closing of your sale to identify the properties you are interested in buying.
- 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.
- 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.
- Proper Title Holding: You must purchase and take title to your new property exactly as you held title to your old property.
- 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.