When dealing with incidental items of personal property in a 1031 exchange, it’s a good idea to dress up the settlement statement to remove ambiguity and create certainty. If you are receiving appliances, tools, or other equipment as part of the purchase of your 1031 exchange real property, it’s a good idea to include a line item on the settlement statement that shows that those items were paid for pursuant to the purchase agreement and bill of sale. Furthermore, it’s an even better idea to pay for all of these items outside of closing, using your own out-of-pocket funds (and not the 1031 exchange funds). Don’t muddle up your 1031 exchange by using exchange funds to pay for incidental items of personal property.
This is a pretty conservative approach to dealing with these incidental items, but it’s typically beneficial to be as conservative and careful as possible in a 1031 exchange to avoid putting your exchange in jeopardy.
1031 Exchanges Provide Many Tax Benefits
A 1031 exchange of real estate provides many tax benefits. Any United States taxpayer can avail themselves of these tax-advantageous benefits of section 1031 of the Internal Revenue Code. If you have questions about the like-kind exchange process and how it may be beneficial for your situation, contact a qualified intermediary at CPEC1031, LLC today. Our intermediaries have two decades of experience facilitating 1031 transactions of all sizes. We can answer all of your questions and make sure you are well equipped to make the best possible decision about your investment property.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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