In a 1031 exchange, there are strict rules that govern the time periods by which you must abide in order to have a successful exchange. Specifically, you have 180 days total to complete your exchange. This goes for both forward and reverse exchanges.
Parking Your Replacement Property
Sometimes, taxpayers find the perfect replacement property before they’re able to sell their relinquished property. The good news is, you are able to purchase that relinquished property and park it with your intermediary’s Exchange Accommodation Titleholder, and take the next six months to market and get the highest and best price for your old property, and still benefit from a 1031 exchange. You can have your replacement property all teed up, ready and waiting for you, and then when you dispose of your old relinquished property.
The steps to wrap-up are:
Relinquished property sells.
Parked replacement property transferred to you.
Exchange is over and tax is deferred
If You Don’t Make It You Still Have 1031 Exchange Options
Here is a 1031 Tip. If the stars do not come into alignment (within six months), and you cannot unload your old relinquished property so that you reverse exchange fails, it’s not the end of the world. You’ll end up owning both properties. You can still do a 1031 exchange on your old relinquished property (when and if it eventually sells). But you will have to exchange into something else that you don’t already own. At the end of the 180 days, your EAT is done holding it (parking is over); they will transfer it to you, so that it is your property now. You can’t exchange into something you already own, but (when your relinquished property eventually sells) it is still possible to exchange into something else (just not the property that you already own).
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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