1031 Exchange Requirements

If you are looking to exchange your investment property and acquiring another, you may be interested in the 1031 exchange requirements. The 1031 exchange allows you to defer taxes because you have invested into a property that was similar to the one you sold using the profits from the sell. The 1031 exchange can be beneficial, however, in order to participate there are requirements.

Transfer

In order to qualify for the 1031 exchange, you must transfer your property in exchange for another. Your investment cannot be sold.

Timeline

If you are going to be an exchanger, you will have 45 days to identify a property to acquire. From the date of identification, you will have 135 days to actually purchase the property. The total process is 180 days from start to finish.

Property Identification

Prior to acquiring your new property, you must transfer your relinquished property. As part of the first 45 days, you must provide a written description about the potential property you want to acquire. The description does not have to be detailed, but the description should be similar to the property you are exchanging. If you have acquired the property within the 45 days, the purchase agreement can serve as identification.

blog comments powered by Disqus