Replacement Property

Do I Need to Assign My Replacement Property Purchase Agreement to My QI?

Replacement Property Purchase Agreement

When perusing your replacement property assignment agreements, you may come across a commonly included section that reads something like the following: "Exchangor intends to assign its rights but not its obligations in the Replacement Property." What exactly does this mean?

Replacement Property Purchase Agreement

Basically, this gives the Exchangor the right to receive the replacement property from the seller, but does not make the Exchangor responsible for fulfilling any of the things the seller is required to do. 

In the “old days,” 1031 exchanges had to be done by conveying the subject properties from the seller to the Intermediary, then from the Intermediary to the buyer. The regulations still require that we initially structure it that way even though we later go on to instruct the Exchangor to receive the replacement property directly from the seller (which is now allowed, provided the Exchangor still assigns its rights to the Intermediary). This is simply a nominal assignment for tax purposes.

  • 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

What to Do When Replacement Property Competition is High

Replacement Property Competition

So you’re in the process of exchanging your property in a 1031 transaction, but competition is high for the replacement properties you’re looking at. What can you do? In this article, we are going to discuss what to do when competition for replacement property is high during your 1031 exchange.

Consider a Reverse Exchange

If you haven’t yet sold your relinquished property, you may be able to do a reverse 1031 exchange in which you first purchase your replacement property before selling your relinquished property. This allows a taxpayer to snatch up a replacement property before another motivated buyer and then sell their relinquished property in a subsequent transaction – all while deferring their capital gains taxes.

Work with a Qualified Intermediary

Working with a qualified intermediary is a great way to find suitable replacement property for your transaction. Your intermediary can walk you through the process step-by-step, explain to you the requirements for identifying replacement property, and even help you find specific properties that fit your needs.

Find Your Replacement Property

If you need help finding the right replacement property for your 1031 exchange, contact the like-kind exchange professionals at Commercial Partners Exchange Company today. Our qualified intermediaries have over two decades of experience working with clients on their 1031 exchanges of real estate. We have the necessary skills to help you identify replacement property, prepare your documents, and answer all of your questions along the way. Contact us today at our downtown Minneapolis office to learn more about the services we provide and to get started with your exchange!

  •  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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Replacement Property Limitations

Replacement Property Limitations

In a 1031 exchange, you need to identify property that you wish to exchange into. But there are certain limitations surrounding replacement properties in a 1031 exchange. In this article, we are going to discuss some of these limitations so you can make sure that you don’t run afoul of any requirements in your 1031 exchange.

Time Limitations

First, there are some time limitations that we need to discuss. You only have 180 days total to start and finish your 1031 exchange, and the first 45 of those days are set aside as your identification period. This is the time you have to identify in writing your replacement property or properties. These are strict deadlines.

Property Limitations

In addition to the time restraints, you are also limited by the number of properties you can exchange into. There are a few basic rules that govern these limitations:

  • Three Property Rule. You are allowed to identify up to three replacement properties for your exchange.
  • 200% Rule. You can identify any amount of replacement properties as long as the total market value of all properties is no more than 200% of the value of your relinquished property.

Twin Cities Real Estate Exchanges

If you are looking to sell real estate, but you don’t want to pay a hefty capital gains tax bill, a 1031 exchange may be the best option for you! Consulting with a qualified intermediary is the first step in any exchange. An experienced intermediary can help you with all the details of your like-kind exchange. Contact us today to discuss your 1031 exchange. Our primary office is located in downtown Minneapolis, but we facilitate exchanges throughout the United States.

  • 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

 

3 Things to Remember When Identifying 1031 Replacement Property

Identify 1031 Replacement Property

There are many things to keep in mind when identifying your 1031 replacement property. In this article, we are going to discuss three important things to remember when identifying replacement property in your 1031 exchange.

Identification Deadline

First, it’s important to remember your deadlines and time periods for the exchange. You have 180 days to complete your exchange, beginning the day after you sell your relinquished property. The first 45 days of that period is your identification period. You have to identify in writing all of your intended replacement properties by this deadline.

3 Property & 200 Rules

In most 1031 exchanges, the exchangor can identify up to three replacement properties. If he or she wants to identify more than three properties, the exchangor can use the 200% rule. Using this rule, the taxpayer can identify any number of replacement properties so long as the total fair market value of those replacement properties in no greater than 200% of the relinquished property.

Acquiring Property in the Identification Period

If you actually acquire any of your replacement properties in the midst of your 45 day exchange period, those properties are deemed to have been identified.

MN Qualified Intermediary Services

Commercial Partners Exchange Company has over twenty years of experience helping taxpayers with their 1031 exchanges in Minnesota and across the country. Our qualified intermediaries will work with you through every stage of your 1031 exchange – from the sale of your relinquished property, to the purchase of your replacement property. Reach out to us today to chat about your 1031 exchange. Our primary office is located in downtown Minneapolis but we work with clients throughout the state of Minnesota and across the United States.

  • 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

Replacement Property Identification Requirements

Replacement Property Identification

When you’re conducting a 1031 exchange, you have 180 days total after the sale of your relinquished property to complete your exchange. The first 45 of those days are designated as your identification period. This is when you identify in writing all of your replacement properties. In this article, we are going to walk through some of the requirements for identifying replacement property in your 1031 exchange.

Identification in Writing

The most important requirement in the identification process is documenting your identification. Your replacement property identification needs to be made in writing. This means you need to compile the basic information about your replacement property (address, name, legal description, etc.) and send it to your qualified intermediary. It’s very important to document this process and confirm receipt with your qualified intermediary.

Start Early

Starting the identification process early is essential. Mistakes happen, and you want to make sure any errors that arise are addressed and resolved before the final day of your identification period. Working with your qualified intermediary before you even sell your relinquished property can give you a head start on the identification process.

1031 Exchange Company in MN

If you are searching for a company to facilitate your 1031 exchange of real property, look no further than Commercial Partners Exchange Company. Our team of qualified intermediaries has been working with taxpayers throughout the country on their like-kind exchanges for decades. We have the knowledge and experience to ensure your exchange completes successfully. Contact us today at our downtown Minneapolis office to set up a time to chat with one of our 1031 exchange specialists.

  • 1031 Hotline: If you have questions about 1031 identification requirements, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved