1031 Exchange - Considering A Tax Deferred "1031 Exchange"?
What is a 1031 Exchange?
A 1031 exchange is a simple strategy and method for selling one property that's qualified, and then proceeding with an acquisition of another property (also qualified) within a specific time frame. The logistics and process of selling a property and then buying another property are practically identical to any standardized sale and buying situation, a "1031 exchange" is unique because the entire transaction is treated as an exchange and not just as a simple sale. It is this difference between "exchanging" and not simply buying and selling which, in the end, allows the taxpayer(s) to qualify for a deferred gain treatment.
(US CODE: Title 26, §1031)
What are the specific timelines?
The Identification Period: This is the crucial period during which the party selling a property must identify other replacement properties that he proposes or wishes to buy. It is not uncommon to select more than one property. This period is scheduled as exactly 45 days from the day of selling the relinquished property. This 45 days timeline must be followed under any and all circumstances and is not extendable in any way, even if the 45th day falls on a Saturday, Sunday or legal US holiday.
The Exchange Period: This is the period within which a person who has sold the relinquished property must receive the replacement property. It is referred to as the Exchange Period under 1031 exchange (IRS) rule. This period ends at exactly 180 days after the date on which the person transfers the property relinquished or the due date for the person's tax return for that taxable year in which the transfer of the relinquished property has occurred, whichever situation is earlier. Now according to the 1031 exchange (IRS) rule, the 180 day timeline has to be adhered to under all circumstances and is not extendable in any situation, even if the 180th day falls on a Saturday, Sunday or legal (US) holiday.
How can we help you?
- Connect you with a Qualified Intermediary.
- Assist you in finding all 1031 replacement property options.
- Educate you on how oil and gas properties can qualify.
- Help you locate a professional 1031 Attorney or Accountant.
- Help with financing on your replacement property.
- Most importantly, we answer any 1031 related questions.
This is an IRS-recognized approach to the deferral of capital gain taxes, it is very important to understand the components involved and the actual intent underlying such a tax deferred transaction. Call us now to see if you have qualifying properties that will allow you to take advantage of this transaction type.