1031 EXCHANGE TIMELINE FULL
1031 EXCHANGE TIMELINE PROFESSIONAL

Risks liability risks zoning, city ordinance, and/or legal compliance risks title andД®scrow risks flood risks fire risks credit risks and risks of obsolescence.A 1031 exchange, or like-kind exchange, lets real estate investors defer capital gains and depreciation recapture taxes indefinitely. Other participants the possibility that a property may be overleveraged tax lawД¬hange risks interest rate risks economic risks risks of terrorism environmental Possible conflicts of interest among asset managers, property managers, and Limited to: cash distributions not being guaranteed real estateвЂ™s illiquidity risksДЄssociated with owning, managing, operating and leasing real estate property Risks associated with investing in Real Estate include, but are not

1031 EXCHANGE TIMELINE PROFESSIONAL

Important for readers to consult with a licensed tax professional regarding their TFS Properties is not a legal or tax professional. Information is at an investorвЂ™s own risk. Information presented is accurate, reliable, or current. Warranties, or guarantees, either express or implied, as to whether the However, TFS Properties makes no representations, Properties has made this information available from sources it believes are Not be considered a recommendation or personalized advisory advice. The information provided is for informational purposes only. Additional requirements apply to this type of exchange.ДЇor General Purpose Only Legal Disclaimer

1031 EXCHANGE TIMELINE FULL

A slight delay, even if both still occur on the same day, can disqualify the exchange and result in you being taxed on the full amount of the sale of your property.ДЇinally, a construction or improvement exchange allows you to make improvements on the replacement property using the proceeds from the sale of your relinquished property, while your qualified intermediary holds the property deed in trust for up to 180 days. But, if you have enough cash accessible, it can be done.ДЄ simultaneous exchange requires that the sales of both the relinquished and replacement properties close at exactly the same time. This can be difficult to pull off, since you must use cash only for the purchase, and many banks will not provide loans for reverse exchanges. You would first purchase the replacement property and then later sell your relinquished property.

However, there are three other less common types of 1031 exchanges that can be performed.ДЄ reverse exchange is, predictably, the exact opposite of a delayed exchange. This is the type that we described above where you sell your property first and then later purchase another property, with the 45-day identification period and the 180-day completion period. The most common type of 1031 exchange used in Florida and throughout the country is a delayed exchange. So, you could exchange three single-family home rental properties for one large apartment complex. You can opt to relinquish one or more of your properties in exchange for one or more other properties. Multiple properties can be involved in the exchange. All properties involved in the exchange must be located in the United States, although you can trade a Florida investment property for another property elsewhere in the country. Property types can include apartment buildings, duplexes, single-family rental properties, commercial office building rentals, vacation home rentals, and restaurant property rentals, among other things. No personal properties or primary residences may be exchanged using Section 1031. But, the scope of the program was limited starting January 1, 2018, to only include business or investment properties. Section 1031 used to be applicable for exchanges of a larger range of real estate types and personal property items, such as art, franchises, equipment, partnership interests, stock in trade, securities, certificates of trust, and beneficial interests. The original premise of 1031 exchanges was that one property would be swapped directly for another, but this proved difficult to actually execute since the chance of finding someone who owns a property that you want and who wants to buy your relinquished property at the same time is slim. As we mentioned above, the properties exchanged must be like-kind, which means that they are similar in nature or character.

1031 exchange timeline