1031 Exchange Information Blog

1031 Exchange Blog

January 15th, 2012 at 10:31 am

When a 1031 Exchange property is gifted in the latter part of a tax year (i.e., more than 6 months into the year) which party claims the investment property (and associated income and deductions) on their tax return? Can this be determined by agreement between the parties or this determined by IRS guidelines?

Gifted 1031 Exchange properties are tricky business. Though some may consider it a cop-out, the best mode of action is to discuss this with your CPA or attorney.  Your question contains specific detail that could lead to answer in either direction. Because of this, it is much better to discuss your situation with your CPA or attorney. Better safe than sorry.

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October 23rd, 2011 at 10:33 am

if I were to do a 1031 exchange on my property, current value 650000 for another property with the same value in a different county, would I be able to keep my property taxes at the base that I am currently paying of about 1100 a year?

1031 exchange in every state.

Each county has different rules about how property taxes are figured so I can’t really answer that question.

 

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August 28th, 2011 at 12:50 pm

Can I 1031 Exchange with a property in Canada?

IRS 1031 Exchange is available to US Taxpayers in all 50 states and the US Virgin Islands. Canada is foreign soil and you may not 1031 Exchange for property in Canada.

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August 28th, 2011 at 12:48 pm

Can I do a simultaneous 1031 Exchange?

These are very tough to make happen in the same day, though not impossible and NEVER guaranteed to be the same day.

  1. You have to co-ordinate with your closer for the property you are selling and the property you are buying. If these are different companies or people, a simultaneous 1031 Exchange is nearly impossible.
  2. If you have the same closer for both properties, you still have the hurdle of transferring the 1031 Exchange proceeds to the Safe Harbor Qualified Intermediary. You must show that the funds were beyond your direct control between the sale of your property and the purchase of your new property. This means the money must be stored with your QI, though there are no regulations about how long the QI has to hold the funds before you can buy. If you close in the afternoon, this will not work. The closing must be first thing in the morning.
  3. Federal wires can take up to 2 hours to complete. If you are wiring your funds to your QI, remember the sooner is always the better.
  4. In order for the simultaneous 1031 Exchange to work, the QI would need to wire your funds back to you in the same day. This can be an issue too if the documentation isn’t EXACTLY right. A QI is entitled to take a reasonable amount of time to review your docs and make sure everything is OK before he releases your funds back to you.

Given these above events, you can see that, while possible, these are quite difficult. And WOW, what’s your hurry? Trying to make this all happen in one day causes a great deal of stress on all of the players involved. It will probably cost you more and will be subject to confusion and collapsing of your exchange because it wasn’t done right. Talk about hurry up and screw it up! Next day exchanges, while still a rush, give everyone involved breathing room to make things happen confidently and correctly. Even better! Try giving all the players involved a week to make things happen. You’ll be surprised by how easy you 1031 Exchange can become if you just take the time to do it right!

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August 28th, 2011 at 12:39 pm

What is the cheapest 1031 Exchange?

People are always looking for a bargain regardless of what they are buying and in today’s economy, this makes perfect sense. Realty Exchanger’s strives to remain competitive in the 1031 Exchange industry and is proud to offer some of the best prices for 1031 Exchange today. Be sure to check our web page for more information regarding how much a 1031 Exchange costs.

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August 13th, 2011 at 10:33 am

I closed on an investment property and did not know that I needed to give the proceeds from the sale to a third party, before looking for a like property. I did not cash the check yet. Is there any way I can still do this?

If you have the check in your possession you are in constructive receipt of your funds which prohibits you from conducting a 1031 Exchange.

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August 13th, 2011 at 10:31 am

Just one question, Can I (non-citizens with visa B1) make business in Real State using the 1031 rule exchange?

Typically, not. 1031 Exchange is limited strictly to US Tax Payers. Though, if you are a US Tax Payer, talk to your attorney, there may be a loophole.

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August 13th, 2011 at 10:29 am

If my replacement property cost is $50,000 less than my relingquished property would I still qualify and pay capital gains on just the $50,000? and if there is a difference in cost bassis that results in boot would the above example apply to this as well?

Any left over money in a 1031 Exchange is considered boot and subject to capital gains tax and possibly income tax. See you CPA!

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July 26th, 2011 at 11:46 am

I recently sold a piece of property and did not do a 1031 can I still qualify? Can you help me with my problem?

This is a big gotcha that few know about and is why careful planning is always important when it comes to 1031 Exchange.

If you sell your property and the in the middle of the sale do the following!

Do not, we repeat, DO NOT, take control over the money. There is a major constructive receipt issue here, so at all costs, make sure that you do not receive the sales proceeds. Leave them in Escrow at the Closing Company’s Account contact Realty Exchangers ASAP! We will contact your closer and get the proceeds transferred into SAFE HARBOR as quickly as possible.

If you have already taken control over the funds….IT IS TOO LATE and a 1031 Exchange is no longer possible because you have control over the money.

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July 14th, 2011 at 1:25 pm

How many 1031 Exchanges can I do in a single year?

You can do as many 1031 Exchanges as you want in a single tax year, provided that the properties you exchange each qualify for 1031 Exchange. There are no rules preventing you from doing as many as you like.

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