There are a lot of things that can go wrong with a 1031 exchange of real estate if you’re not careful. If your exchange fails, you will not be able to defer your capital gains taxes on the sale, so it’s important to set yourself up for success as much as possible. In this article, we will offer some great tips for not letting your 1031 exchange fail.
Sign Before Your Close
Your 1031 exchange documents must be signed on or before the closing date for the sale of your relinquished property. After the sale of the relinquished property, it is too late to set up a like-kind exchange.
Be Careful with Your Expenses
Expenses can be tricky in the realm of 1031 exchanges. Some expenses can be paid with the net proceeds, while others cannot. Consult with an intermediary about these expenses before closing.
Same Taxpayer Requirement
Remember, the same taxpayer who sells the relinquished property must acquire the replacement property. A common example occurs with recently married couples. In a 1031 exchange, you can’t sell a property by yourself and then acquire a new property jointly with your spouse.
Contact a Qualified Intermediary
At Commercial Partners Exchange Company, we have more than twenty years of experience working with clients on their like-kind property exchanges. Our intermediaries can help guide you through the 1031 exchange process, preparing your documentation, and answering your questions every step of the way. Let us help you through the ins and outs of your 1031 real estate exchange. Contact us today at our office in downtown Minneapolis to learn more about our services and get your 1031 exchange set up.
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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