Jake Carpenter with Equilus Capital Partners

Jake Carpenter

Are you looking for a replacement property for your 1031 Exchange? Have you wondered if a 1031 Exchange would work for you? Let’s discuss the ins and outs of a 1031 Exchange, as well as a solution that could work well with the 1031 Exchange. Please be advised that this article is general in nature and is not in any way intended to give tax and/or legal advice. You should always work with your own tax and legal professionals when evaluating if a financial strategy is appropriate for your situation.

A 1031 Exchange originates from the IRS tax code, Section 1031. It requires that the Seller of income-producing property work with a Qualified Intermediary (QI). The QI takes receipt of the sales proceeds from the relinquished property and deploys them into escrow for the purchase of the replacement property. The time constraints of a 1031 Exchange must be strictly followed to achieve tax deferral. You will have 45 days from the sale of your property to identify one, or multiple, qualified “like-kind” replacement properties of equal or greater value. You must purchase the qualified replacement property(ies) by the 180th day after the closing of the property you sold. Qualified properties are those that have been held for business or investment purposes. Properties that have been held for your personal use, such as your residence do not qualify for a 1031 Exchange. All of the properties in the exchange must be qualified properties.