1031 exchanges can be conducted anywhere in the United States. However, each state, including North Dakota, has its own idiosyncrasies when it comes to like-kind exchanges. It’s important that you familiarize yourself with these details and work with a skilled intermediary who has experience facilitating exchanges in your given state.
North Dakota Like-Kind Exchange Rules
Before you begin your 1031 exchange, it’s important to note that there are a variety of rules you need to follow. First off, you need to make sure your North Dakota property qualifies for 1031 exchange treatment. All property that’s bought and sold in a 1031 exchange needs to be real estate held for a qualified purpose (namely, investment or business purposes). If you’re planning to sell your primary residence in a 1031 exchange, that won’t work.
Second, you need to be aware of the time restrictions of a 1031 exchange. Any 1031 exchange needs to be finished within 180 days after it starts. During the first 45 of those days, you need to unambiguously identify in writing your replacement properties.
3 Popular Types of North Dakota 1031 Exchanges
1031 exchanges all have the same outcome (deferral of capital gains taxes), but they come in different forms. Here are the three most common types of 1031 exchanges in the state of North Dakota:
Forward Exchange. The most commonly used form of like-kind exchange is the forward exchange in which a taxpayer sells a relinquished property, then reinvests their sales proceeds into a like-kind replacement property.
Reverse Exchange. A reverse exchange operates the opposite way of a forward exchange. The taxpayer first acquires their replacement property and then sells their relinquished property. This can be a great option if you want to snatch up the perfect replacement property before someone else does.
Construction Exchange. A construction, or build-to-suit, 1031 exchange is a like-kind exchange that involves construction improvements to the replacement property. This is a good option if your property is not exactly as you’d like it, but remember that you still only have 180 days total to complete your improvements and the 1031 exchange as a whole.
North Dakota Like-Kind Exchange Resources
The more informed you are about 1031 exchanges in North Dakota, the better suited you’ll be to completing a successful exchange. To that end, we’ve compiled a list of helpful online resources related to 1031 exchanges:
Start Your North Dakota 1031 Exchange!
If you are interested in deferring capital gains taxes when selling your next investment property in North Dakota, a 1031 exchange may be a great option for you! Contact CPEC1031, LLC today to discuss the specifics of your next North Dakota 1031 exchange. Our qualified intermediaries have over two decades of experience facilitating like-kind exchanges throughout the United States (including North Dakota). We work with clients conducting exchanges in Bismarck, Fargo, Minot, Grand Forks, and beyond! Our team of professionals can walk you through the entire exchange process and ensure that all the details are accounted for. Reach out to start your 1031 exchange!