ABOUT 1031s
A Properly Structured 1031 Exchange
1031 EXCHANGES
Dating back to 1921, Internal Revenue Code §1031 allows investors to defer capital gains tax on the sale of an investment property by deploying the proceeds into a qualified replacement property(ies). What once began with the swapping of horses and land amongst property owners, the definition of today’s “like-kind” exchange has expanded significantly. The term “like-kind” refers to the nature or character of the property, rather than it quality or grade. Property that is held for business or investment purposes will typically qualify.
Here are some examples:
Healthcare & Medical
Coops & Condos
Student Housing
Multifamily Apartments
Retail Centers
Industrial Warehouses
Healthcare & Medical
Student Housing
Retail Centers
Coops & Condos
Multifamily Apartments
Industrial Warehouses
To achieve maximum tax deferral benefit in a 1031 exchange, certain timelines and requirements must be met:
Engage a Qualified Intermediary (QI) prior to sale of the investment property to hold the 1031 funds in escrow
Identify potential replacement property(ies) within 45 days after the sale of the relinquished property
Close on the replacement property(ies) within 180 days after the sale of the relinquished property
Match an equal or greater amount of debt on the replacement property(ies)
Reinvest 100% of the net sales proceeds into the selected replacement property(ies)
To achieve maximum tax deferral benefit in a 1031 exchange, certain timelines and requirements must be met:
Engage a Qualified Intermediary (QI) prior to sale of the investment property to hold the 1031 funds in escrow
Identify potential replacement property(ies) within 45 days after the sale of the relinquished property
Close on the replacement property(ies) within 180 days after the sale of the relinquished property
Match an equal or greater amount of debt on the replacement property(ies)
Reinvest 100% of the net sales proceeds into the selected replacement property(ies)