| This tax exchange is becoming
the most widely used tax deferred vehicle for reinvesting real estate
gains. Following are just a few things you need to know about the
Section 1031 Exchange:
A- Property exchanges must be
"like-kind". The law states "the words 'like-kind' have
reference to the nature or character of property and not to its grade or
quality". The fact that any real estate involved is improved or
unimproved is not material.
B- If 'boot' such as
non-qualifying property, or cash is received, gain will be recognized
for tax purposes, up to the amount of the boot received.
C- The requirements of the
Deferred Exchange are:
- Within 45 days of
relinquishing property #1 the taxpayer must identify its
'like-kind' replacement. (the code goes on to say that up to three
properties may be identified, or any number of properties provided the
aggregate value does not exceed 200% of the fair market value of the
relinquished property).
- The replacement
property must be received by the taxpayer by the earlier of 180 days
from the date the taxpayer transferred the relinquished property (OR THE
DUE DATE FOR THE TAXPAYERS' RETURN FOR THE TAXABLE YEAR OF CLOSING ON
THE RELINQUISHED PROPERTY)
Please contact me for more information and I
will be happy to help. |
