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1031 Exchange an Outline

By
Real Estate Agent with Remax Metro Staten Island, New York

A 1031 exchange is the sale of a property in exchange for a like kind property purchase.  The exchange would qualify the gain of relinquished property as tax differed

Like Kind Properties:

  • two family residence - rental portion only
  • office building
  • industrial warehouses
  • retail stores
  • multi family apartment building
  • farms
  • vacant undeveloped land
  • factories
  • shopping centers
  • leasehold interest of 30 years - including options to renew

For a property to qualify for a 1031 exchange and defer the tax liability,  the relinquished property and replacement property must be qualifying property and like kind property, of same nature and character.   

Time allowed for exchange:45 days after closing relinquished property to identify replacement property.  180 days after the closing of relinquished property to close on replacement property.

Replacement property would be equal or greater in value.

A qualified intermediary  must be employed to structure the exchange.

This blog is a basic outline of a 1031 exchange and not legal advise. You should contact your attorney or accountant for any of your own transactions.

 

Jeffrey Dolfinger
24/7 Realty Inc. - Poughkeepsie, NY
NRBA Member
1031's are great but hey your just delaying a tax that you will eventually pay unless you 1031 until you die and your children continue to do the same.
Jan 09, 2008 04:38 AM
Don Draughn - Mortgage Professional
High Point, NC
I have heard this talked about for years but never really understood it.  Thanks for the info.
Jan 09, 2008 11:43 PM
Concetta Pepenella-Timmons
Remax Metro Staten Island, New York - Staten Island, NY
Associate Broker

There are advantages to delaying a tax.  Stimulates economy, encourages investment, allows capital to flow, reinvest up & allows growth.  

Jan 10, 2008 07:25 AM