Milissa Ormiston-Hall

Oregon has a clawback provision, meaning the deferred taxes will become payable to the state when the Replacement Property is sold and no further exchange is performed. For non-residents of Oregon,  a withholding will be collected at the time of sale unless a 1031 Exchange is conducted. In such cases, completion of form Oregon form OR-18-WC will be required.

Participating in a 1031 Exchange offers several tax benefits, including the deferral of federal taxes on the capital gain and taxes on the gain due to prior depreciation deductions. The state of Oregon also allows deferral of state taxes. In addition, if you purchase a more expensive Replacement Property, you will benefit from a “new depreciation schedule” on the portion of the purchase price that exceeds the basis of the Relinquished Property.

You have a very short window of time to complete your exchange. Everything is from the point of when you close on the sale of your Relinquished Property. You have 45 days from the point of closing to either close on or identify what it is you are going to purchase as your Replacement Property and the exchange must be completed within 180 days, including the 45 day identification period. People tend to gloss over how important day 45 is. When you identify on day 45 is it important to realize that you can only acquire one or all of the properties you identify on day 45 to complete your exchange. You are limited to one of three rules to identify what it is you intend to purchase for your exchange.

No. It is crucial to remember that a 1031 Exchange requires both the sale of a Relinquished Property and the purchase of a Replacement Property. In the case of an Improvement Exchange the exchange, the purchase of real estate and subsequent improvements must be included to as part of the value of the Replacement Property at the conclusion of the exchange. For more information, be sure to check out Improvement Exchanges.