We often hear from investors who sell property intending to buy other property, but are unaware of the rules and regulations of 1031 exchanges for deferring capital gains tax. If you've already completed your sale, can you still do a 1031 exchange?
Relinquished Property Sale
If the sale of your relinquished property has already occurred (the benefits and burdens of ownership have shifted and payment received) then you may have engaged in a closed transaction and may have recognized the gains if you have received the payment. You should talk to your own CPA or tax advisor who knows your specific situation.
Safe Harbor Exchanges
There are a number of requirements for conducting a safe-harbor exchange and requisite written notices that must be given to comply with the provisions of Section 1031 of the Internal Revenue Code.
Generally for a safe-harbor exchange, before the sale occurred you would have had to retained a third party administrator (often referred to as a qualified intermediary or facilitator) to step into your position as the seller, and to receive (and escrow) the net proceeds.
Prepare for the Closing
If you have already closed on your sale and conveyed the relinquished property to the purchaser, then it is too late for our company to assist you as a qualified intermediary. Our policy is to have an exchange agreement in place prior to the sale being completed, and to provide written instructions and notices to the parties involved in the transaction.
- 1031 Hotline: If you have questions about 1031 exchange requirements, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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