Basic Rules of 1031 Exchanges
· Only pertains to investment properties.
· Does not apply to primary residences or vacation homes unless they can qualify as an investment under a very small sliver of exceptions.
· Property must be exchanged for a “like for like” property, which means another investment property must be purchased, not a primary residence (again, a few exceptions apply).
Process
· Identify a replacement property within 45 days of selling the relinquished property, in writing.
· Sale must be complete on the replacement property within 180 days after the sale of the relinquished property is completed or the due date of the income tax return.
· The funds from the relinquished property cannot be touched by the principal. A qualified intermediary or exchange facilitator must handle the exchange of funds.
You may refer to the IRS Fact Sheet for 1031 Exchanges for more information. You should work with a qualified real estate professional who understands the intricacies of these transactions to ensure you are in compliance with timelines and guidelines.
If you have a case with real property issues or one that needs to be listed, give me a call or send me an email. I am happy to help!
If you have a case with real property issues or one that needs to be listed, give me a call or send me an email. I am happy to help!
All the best,
Lindsey Harn
