Mark Bullock, Esq.
Regional Attorney Manager, Mountain Region
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Frequently Asked Questions
How does a 1031 Exchange work?
Exchange pitfalls. What should I be aware of?
How can I determine if a 1031 is right for me?
My first and best suggestion is to work with your tax advisor to crunch the numbers – look at the amount you’d be paying in capital gains taxes if you were to forego an exchange. If that number isn’t something you’re willing or wanting to pay and you’d rather reinvest it in investment real estate, a 1031 Exchange may be your best path forward. I’ve never had an exchanger come back to tell me they wish they hadn’t done an exchange, but I sure have had plenty come back to say they wish they had!
What are the benefits of doing a Tax Deferred 1031 Exchange?
The gift of a 1031 Exchange is that one is able to defer paying what would otherwise be a hefty amount in capital gains taxes. Being able to reinvest that amount in real estate, thereby increasing one’s portfolio size, cash flow, etc., is meaningful and impactful.
Does Utah, Montana, Idaho, Wyoming or Colorado have state specific 1031 Exchange rules and regulations?
Montana has a claw back provision for 1031 Exchanges meaning the deferred taxes will become payable to the state when the Replacement Property is sold and no further exchange is performed. There are no state specific rules for 1031 Exchanges in Utah, Idaho, Wyoming or Colorado.
Is a Qualified Intermediary (QI) needed?
Yes. To avoid a taxable sale of the Relinquished Property, the use of an intermediary in virtually every 1031 transaction should be utilized. In addition, the Exchanger must enter into written agreements with the QI before the Relinquished Property is sold.
For my Replacement Property, do I have to buy from the properties I’ve identified in my 1031 Exchange?
Yes. During the 45 days you can change what you’ve identified, but once your identification period has expired, you must buy from only that list. There cannot be any substitutions or changes after day 45. The rules under section 1031 are very strict.
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With coverage through Colorado, Utah, Wyoming, Montana and Idaho and an office near Salt Lake City, IPX1031, the nation’s largest exchange facilitator and accommodator, provides industry leading exchange services including guidance, expertise, security and key information on 1031 Exchange rules, regulations and strategy. IPX1031 Exchange experts offer you customized solutions to defer capital gains tax and maximize equity in your 1031 like kind investment property.
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