Graham Beene

If you are selling real property that has been held for investment purposes and are looking to defer the capital gain taxes associated with the sale, a 1031 Exchange may be a wise choice for you. You can defer these taxes by reinvesting into, like-kind investment property.  Be certain to speak to your tax advisor about your plans.

Real property located in any of the 50 US states, the District of Columbia, Guam, Northern Mariana Islands and the U.S Virgin Islands can qualify for a 1031 Exchange. Yes, you can buy out of state. IPX1031 is a nationwide company and facilitates exchanges across the US.

To have a fully tax deferred exchange, the Replacement Property needs to be the same or greater in price, you must replace the value of any debt that is paid off at the sale of the Relinquished Property and you need to reinvest all of the equity from the Relinquished Property.

The exchange period consists of 180 days. This period starts the day that the burdens and benefits of ownership transfer- usually the date of closing. The first 45 days of this period will serve as your identification period. Any potential Replacement Property must be identified by this 45th day. You will have the remainder of the 180 days to acquire the Replacement Property.

You cannot exchange your primary home. The property being exchanged must be held for investment purposes. A vacation or second home does qualify, however, personal use is limited to the greater of, 14 days or 10% of the amount of time that it is rented out during the two year period, prior to the exchange.