For those in the commercial Realtors group this is a follow up blog!
Revenue Procedure 2002-22: The newest form of qualified exchanges.
This allows clients wishing to identify a passive investment, as an alternative to the labor intensive management, repair and maintenance of income producing property.If you wish to sell an investment property, pay no current capital gains tax and don't want to manage the new replacement property this procedure is worth considering.
You are matched up with 20 to 50 other investors, who pool their exchange money allowing them to buy a first class office building, high rise, shopping mall, or hotel. this qualifies as an exchange because you will have a tenant in common interest in the asset and more importantly the deal is structured with property management in place.
Some of the reasons to consider this type of exchange:
*Can't find suitable investment and the 45 days are almost over
*Need additional property to complete the gross dollar expenditure
*Back up plan if other property fails to meet inspection, or other conditions
*retiring and want to simplify the stress of tenant management
*selling a multifamily and want a single family, and no managed tenants for the balance of the exchange
*From a Realtors stand point property owner wouldn't list his investment property until he has explored a suitable replacement alternative (property).
Oil and gas tenants in common are another possible solution as these are considered mineral rights in many states and therefore real estate.
I do recommend that anyone dealing with income property or raw land held for investment, have a good knowledge of the 1031 exchange procedure, and make sure the seller doesn't touch the money too soon.
More about 1031- exchanges steve@alpinelakes.com /or/ 800-926-5653
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