Things You'll Need:
- Calculators
- 1031-exchange Facilitators
- Real Estate Attorneys
- Personal Financial Software
- Calculators
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Step 1
First, understand three basic rules: 1) The purchase price of the replacement property must be equal to or greater than the net sale price of the property you're relinquishing; 2)All cash or other proceeds received from the sale of the relinquished property must be used to acquire the replacement property; and 3) The properties must be of "like-kind," which means they must be the same type of property - must be, for example, property held for productive use in a trade or business or property held for investment.
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Step 2
Select an exchange facilitator to handle paperwork and to receive the funds from the proceeds of the sale.
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Step 3
Sell your investment property to a buyer; you must inform the buyer that you are doing a tax-deferred exchange.
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Step 4
Identify a replacement property within 45 days of the close of escrow or the date you transfer title of the investment property you relinquished. The address of the new property must be written down, signed by you and received by the intermediary or exchange facilitator within this 45-day period. (Failure to meet the identification requirements will make the sale of the relinquished property a taxable event.)
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Step 5
Acquire the identified replacement property within 180 days of the close of escrow or transfer of title of the investment property you relinquished. When you purchase this replacement property, you must make the seller aware that you are doing a tax-deferred exchange.










Comments
wildpen said
on 1/29/2009 Great Article.
I have yet to do one of these as we have been holding most of our property.
I think this is also called a "Starker Exchange".
James
http://www.realestategozone.wordpress.com