As we’ve discussed many times before, there are numerous rules you have to abide by in order to execute a successful 1031 exchange and defer your capital gains taxes. One of the most important areas to be aware of in this realm is property identification. In this article, we are going to discuss five required elements for a valid property identification in a 1031 exchange of real estate.
1031 Exchange Property Identification
In a 1031 exchange, your replacement properties should be:
Clearly and specifically (unambiguously) designated
In writing
To the qualified intermediary (or other person involved in the exchange who is not disqualified)
Using the postal address(es) of the property (including House/Building Number, Street Name, City, County, State, and Zip Code), and/or the complete legal description (including the Metes and Bounds description, or Lot and Block or Other Subdivisions, or Condominium Unit Number and Name) and/or the County Tax Assessor's Parcel Number (APN, PID or Property Tax Identification Number) or you can use the property’s distinctive name, such as “The Empire State Building”
Sent before Midnight of the 45th day after the closing of the sale of your relinquished property
Generally, the more specific the identification the better. The more general or less specific, the more risk that the 1031 exchange could be disallowed during a federal or state audit.
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.
© 2021 Copyright Jeffrey R. Peterson All Rights Reserved