1031 Exchange

Results Realty, LLC has extensive knowledge and experience with IRS Tax Code
1031 exchanges - Both Forward and Reverse. This is a powerful wealth building
tool that should be utilized when looking at selling an investment property.

The 1031 Exchange Rule

A property transaction can only qualify for a deferred tax exchange if it
follows the 1031 exchange rule laid down in the US tax code and the treasury
regulations. The foundation of 1031 exchange rule by the IRS is that the
properties involved in the transaction must be "Like Kind" and Both
properties must be held for a productive purpose in business or trade, as
an investment. The 1031 exchange rule also lays down a guideline for the
proceeds of the sale.  The proceeds from the sale must go through the hands
of a "qualified intermediary" (QI) and not through your hands or the hands
of one of your agents or else all the proceeds will become taxable.  The
entire cash or monetary proceeds from the original sale have to be reinvested
towards acquiring the new real estate property.  Any cash proceeds retained
from the sale are taxable.

The second fundamental rule is that the 1031 exchange requires that the
replacement property must be subject to an equal or greater level of debt
than the property sold or as a result the buyer will be forced to pay the
tax on the amount of decrease.  If not he/she will have to put in additional
cash to offset the low debt amount on the newly acquired property.

1031 Exchange Rules and Timelines:

There are 2 timelines for a 1031 exchange you should abide by and know.

The Identification Period: This is the crucial period during which the party
selling a property must identify other replacement properties that he proposes
or wished 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.  The 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.