The 1031 exchange is a tax-deferral tool available to all US taxpayers. Through the vehicle of a 1031 exchange you can defer your capital gains taxes on the sale of real property by re-investing your net proceeds into like-kind property. For help with your Mankato like-kind exchange, contact our Minnesota qualified intermediaries today - 612.643.1031.

How a 1031 Exchange Works

Many taxpayers may be interested in a 1031 exchange but don't know how the process works. Here is a brief breakdown of how a 1031 exchange works:

  1. Sale of Relinquished Property. The first step in a typical forward exchange is the sale of the relinquished property. After this sale, the taxpayer has 180 days to finish their exchange.
  2. Identification of Replacement Property. The first 45 days after the relinquished property sale are set aside for the taxpayer to identify the replacement property into which they plan on exchanging.
  3. Close on Replacement Property. On or before the 180th day, the taxpayer closes on their replacement property and moves all of their net proceeds into the new property.

Exchange Requirements

There are several requirements to keep in mind when it comes to like-kind exchanges. First, you have to hold your property for the appropriate purpose - that being investment or business purposes. Property held for personal use cannot be utilized in a 1031 exchange. You also need to complete your like-kind exchange within 180 days, and exchange out or and into like-kind property.

Start a 1031 Exchange in Mankato, MN

1031 exchanges can be an effective tax-saving tool for investors large and small. Make sure that you have a team of professional advisers by your side during your 1031 exchange. Our Mankato qualified intermediaries have decades of experience helping investors with their 1031 exchanges. Contact our 1031 professionals today to get started with your exchange - 612.643.1031.