The Parties and Properties in a 1031 Exchange There are four parties involved in a typical 1031 exchange: the Taxpayer or Exchangor, the Buyer of the Relinquished Property, the Qualified Intermediary and the Seller of the Replacement Property. The Taxpayer or Exchangor: owns an investment property and would like to exchange it for another investment …
Exchanges & Installment Sale Scenarios Taxpayer Able, who is a non-dealer in real estate, owns improved rental property with an adjusted cost basis of $100,000. Able has just received a bona fide offer to sell his property for $750,000. Pursuant to the terms of the offer, the buyer will pay Able cash in the amount …
Exchanges that start in one tax year and end in a subsequent tax year are sometimes called Year-End Exchanges. An exchange must be reported on the tax return for the year in which your relinquished property was sold; if the relinquished property in your exchange was sold in 2020, your exchange must be reported on …
You’ve just completed a §1031 exchange – you closed on a good replacement property (or two), used all the funds in your escrow account, and believe your capital gains taxes on the sale of your original investment property will now be fully deferred! You’re done, right? In fact, you’re almost done: all that’s left …
Don’t Get the Boot! Learn about Rules of Thumb for 1031 Exchanges
Information for this article was obtained by citing the Federation of Exchange Accommodators website The Exchange Authority is a proud member of the Federation of Exchange Accommodators (FEA). The FEA is a national trade association for 1031 exchange activity. We at the Exchange Authority pride ourselves in being leaders in the industry and our affiliation …
What you need to know about the Federation of Exchange Accommodators (FEA) Read More »
People often fail to consider exchanges as an investment strategy because they are misinformed about the requirements of exchanging. However, once their misconceptions have been cleared up, property owners usually find that IRC §1031 is worth considering. Here are a few misconceptions about exchanges: Myth: Exchanges require two parties who want each other’s properties. Fact: …
The primary advantage of an exchange is that the taxpayer may dispose of property without incurring any immediate tax liability. This allows the taxpayer to keep the power of the deferred tax dollars working for in another investment. In effect, this money can be considered an interest-free loan from the IRS. There is no interest …
Holding Period – How Long is Long Enough? There is no hard and fast rule as to the length of time that a replacement property must be used for investment purposes following an exchange before it can be converted from investment use to personal use. Nor is there a fixed test as to how long …
