1031 Exchanges & Tax Audits

1031 Exchange Tax Audit

1031 exchanges are closely examined in any tax audit because they are used by many investors – but a lot of people don’t follow the required rules for an exchange. In this article, we are going to talk about a few tips for dealing with 1031 exchanges when you’re being audited.

Technical Requirements

When looking at a 1031 exchange transaction, the most common red flag for an auditor is the failure to meet the technical requirements of a 1031 exchange. These include the 180 day / 45 day time periods, the like-kind property requirement, and the napkin test – to name just a few. Make sure you’re abiding by all of these technical requirements when conducting your exchange.

Maintain Your Records

The best thing you can do to protect yourself in the event of an audit is to maintain thorough and accurate records of your 1031 exchange transactions. That way you will have all the information needed when your auditor requests it. You should also consult with a 1031 exchange professional before conducting an exchange. A 1031 intermediary can explain the details of the 1031 process and provide you with good advice so your exchange does violate the rules.

Exchange Your Like-Kind Property

The team of qualified intermediaries at Commercial Partners Exchange Company have two decades of experience facilitating exchanges of like-kind property. Our team can help you identify replacement properties, prepare all your documents, and answer all of your questions throughout the process. Contact us to learn more about the 1031 exchange process and to get your exchange off the ground today. Our offices are located in downtown Minneapolis, but we work with clients throughout the state – as well as around 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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