Let’s say you’re at day 170 of your 180 day 1031 exchange period and you don’t have your new replacement property lined up and ready to go. What happens? Are you forced to pay the capital gains taxes and not do a 1031 exchange?
Cutting it Close in a 1031 Exchange
We’ve had clients who have gone right down to the wire on their 180 day exchange time frame. In one instance, it was caused by a snafu with the bank. For whatever reason, the bank could not get the financing approved. The seller was willing, the buyer was willing, but the bank had some sort of difficulty. Without the bank’s money, it’s hard to close on the replacement property. So we said to the client: “why don’t you approach the seller and offer to buy the property on a short term contract for deed, under which the buyer receives equitable title.”
Purchasing a property via a contract for deed is a clever way to get a deal done so that the client can identify their identified replacement property within the 180 day time frame.
In the Midwest, land contracts and contracts for deed are very popular. This particular client that we were working with was in New York, where they don’t do a lot of contracts for deed. So depending on your geographical location, the local customs and practices may dictate the extent of your options.
Contact a Qualified Intermediary
If you’re considering a 1031 exchange, contact a qualified intermediary at CPEC1031 today to work through the details of your transaction. Contact our qualified intermediaries today at our office in Minneapolis to get your 1031 exchange off the ground!
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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