Anyone can do a 1031 exchange and avail themselves of the associated benefits of tax deferral. But many taxpayers are intimidated by the 1031 exchange process and assume it’s too complicated. In actuality, 1031 exchanges can be accomplished by following a few simple rules. In this article, we are going to talk about a few things that beginners should understand about 1031 exchanges.
Qualified, Like-Kind Property
Not all property is eligible for 1031 exchange treatment. The new tax law completely excludes personal property from 1031 exchange treatment. Real property also comes with several restrictions. First of all, your property needs to be held for a qualified purpose (i.e. for investment or business purposes). Furthermore, all property in the exchange needs to be like-kind.
You also have various time periods to keep in the back of your mind during a 1031 exchange. Your total time frame for completing the exchange is 180 days. The first 45 of those days is your identification period for identifying in writing your replacement property.
A qualified intermediary is a neutral third party whose job it is to facilitate your 1031 exchange. Working with an intermediary is the best way to ensure a successful exchange.
1031 Real Estate Exchange Services
At Commercial Partners Exchange Company, our qualified intermediaries assist taxpayers in the exchange of real estate. A qualified intermediary can help you prepare all of the necessary 1031 exchange documents, advise you on your property, and answer all of your questions along the way. Reach out to us today to discuss the details of your real estate exchange. Our primary office is located in downtown Minneapolis but we work with clients all over Minnesota and across the country.
- Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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