The 1031 exchange is governed by several rules that need to be met in order to be successful. In this article, we are going to lay out the three most important 1031 exchange rules that you need to remember when doing a like-kind exchange.
Your Property Needs to be Like-Kind
1031 exchanges are also known as like-kind exchanges. That’s because all property involved in your 1031 exchange needs to be like-kind.
You Need to Have the Right Intent with Your Property
You need to have the right mindset when it comes to your 1031 property. Only property that is held for investment or business use can be considered for 1031 treatment. You cannot use property held primarily for personal use. So your family home is not eligible, but an apartment complex that you manage is eligible.
You Need to Complete Your Exchange within your Time Deadlines
Timing is also an important factor in a 1031 exchange. You are not allowed to sell a property and then use it to exchange into a new property a year later. You only have 180 days total from the start of your exchange to the end. Furthermore, the first 45 of those 180 days are set aside as your identification period. During that time, you have to identify, in writing, your replacement properties.
IRC Section 1031
Our 1031 exchange intermediaries specialize in assisting clients with their like-kind exchanges under section 1031 of the Internal Revenue Code. CPEC1031 has been performing 1031 exchanges for more than twenty years. To learn more about the 1031 exchange process or to speak with one of our intermediaries about getting your exchange started, contact us today to set up an appointment. We work with clients across the country but our primary offices are located in downtown Minneapolis.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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