1031 Exchange Information

A 1031 Tax-Deferred Exchange allows you to preserve your wealth through reinvestment in "like-kind" assets.  When you sell your interest in investment property, you may incur federal capital gains taxes and, in some states, state taxes as well.  A 1031 Tax-Deferred Exchange allows you to reinvest sales proceeds that would otherwise be paid to the government in the form of taxes.

The 1031 Exchange can be a powerful tool in helping you gain wealth through your real estate investments.  It is critical that you have a Qualified Intermediary handling your exchange transaction.  Unfortunately, there is no federal regulation of the Qualified Intermediary industry.  And, because it is fairly easy to become one, it is imperative that you place your exchange funds with a Qualified Intermediary that can protect your assets.  I can assist you in making a quality choice on who to work with.

General Requirements for a 1031 Tax-Deferred Exchange:

Identification Period: The replacement property must be identified with 45 days of the transfer of the first relinquished property.

Exchange Period: The acquisition of your replacement property must either be completed by the earlier of 180 days of the transfer of your relinquished property, or, the due date of filing your federal income tax return for the year in which you transferred the first relinquished property, including extensions.

Fully Deferred Exchanges: For your exchange to be fully tax-deferred, your replacement property must be equal to or greater in value and equity than your relinquished property.  The debt on your replacement property must also be equal to or greater than the debt on your relinquished property, unless cash is added to offset debt. 

You may identify replacement property according to the following rules:

Three-Property Rule: Three properties, regardless of value, or;

200 Percent Rule: Any number of properties, as long as their combined fair market value does not exceed twice the value of the relinquished property, or;

Ninety-five Percent Rule: Any number of properties, regardless of their combined fair market value, as long as you acquire 95 percent or more of the total value of such properties.

Please see my "Useful Links" to get more information on the 1031 Tax-Deferred Exchange.