1031 Exchange Blog
In this 1031 FAQ video, Jeff Peterson discusses what happens when a taxpayer dies during the course of a 1031 exchange. Watch more 1031 educational videos here.
Start Your 1031 Exchange: If you have questions about what happens when a taxpayer dies during an exchange, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2017 Copyright Jeffrey R. Peterson All Rights Reserved
In this 1031 FAQ video, Jeff Peterson discusses construction improvement 1031 exchanges. Watch more 1031 educational videos here.
Start Your 1031 Exchange: If you have questions about construction / improvement exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2017 Copyright Jeffrey R. Peterson All Rights Reserved
In this 1031 FAQ video, Jeff Peterson talks about direct deeding in a 1031 exchange. Watch more 1031 educational videos here.
Start Your 1031 Exchange: If you have questions about direct deeding in a 1031 exchange, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2017 Copyright Jeffrey R. Peterson All Rights Reserved
In a 1031 exchange, you have to buy and receive like-kind property within the exchange period. There are all kinds of different property that can be exchanged. Real property is probably the easiest and most broadly construed like-kind requirement, in that a farm is like-kind with an industrial building. All kinds of real estate can easily and readily be exchanged.
Some assets, such as cooperatives raise an interesting question. In a cooperative you get a share of stock and typically a long-term lease. So is an interest in a cooperative like-kind to the sale of raw land?
You may have to delve into the local state law where the cooperative exists to see if it's treated at the state level as a real property interest, or as a personal property interest. It may go down to how that cooperative was formed at the very beginning of its creation. If the cooperative elects to be treated as personal property and taxed by the local taxing authority as personal property that could impact later acquisitions of it by persons wanting to do 1031 exchanges.
So particularly with cooperatives you want to look at the local laws and how that cooperative was created to determine if it is considered an interest in real estate, which would be like-kind to other real estate, or if it is treated more correctly as personal property which would not be like-kind.
Start Your 1031 Exchange: If you have questions about 1031 exchanges of cooperatives, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2017 Copyright Jeffrey R. Peterson All Rights Reserved
What are some tips for working with a qualified intermediary during your 1031 exchange? The qualified intermediary has a difficult job in that oftentimes they get pulled into a transaction late in the process and have to work quickly to gather the information and details needed to draft the 1031 documents and closing instructions.
The first step is to start early to engage your qualified intermediary at about the same time that you're signing the sale agreement for the sale of your relinquished property. Sometimes people want to sit on the sidelines and not engage their intermediary until they know the buyer is going to preform and close. They may say “I'm going to wait until the inspection period is over, or I’m going to wait until the buyer waives all their contingencies.”
But the problem with waiting until the eleventh hour is it can be a real fire drill to gather all the information and details necessary for the intermediary to properly draft and tailor make the 1031 documents specific to your situation.
Tip one is to start early and to provide the intermediary with the particulars for the taxpayer such as:
Their address
Their tax ID number or social security number
The name and contact information of the title closer or escrow company
The specifics about the property that's being sold such as the address, legal description, and how you’re vested in title
By teeing up the exchange early you give the intermediary time to prepare and coordinate with the title company or escrow company that’s closing the transaction. If you wait until the last minute you may not get the best product or service and it can be very upsetting and stressful to the other parties in the transaction that may have to change their documentation or respond to this unforeseen change in the plan and that can be stressful for everyone.
Start Your Exchange: If you have questions about keeping your exchange funds secure, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2017 Copyright Jeffrey R. Peterson All Rights Reserved
