📢 How to Do a 1031 Exchange 🏢💼

July 22, 2024•2 min read

📢 How to Do a 1031 Exchange 🏢💼

Looking to reduce or eliminate taxes on the sale of business or investment real estate? A 1031 exchange might be your answer! By selling one property and purchasing a “like-kind” property within 180 days, you can avoid capital gains tax, depreciation recapture tax, and even sales tax. Let's dive into how it works and the benefits it offers. 🌟🔄 #TaxBenefits #RealEstate

The 1031 Forward Exchange Process 🏠➡️🏠

Forward exchanges are the most popular type of 1031 exchange due to their versatility, ease, and speed. Here's how it works:

1. Sell Your Current Property: Sell your currently owned property (relinquished property).

2. Buy a New Property: Purchase a new property (replacement property).

To get started, you'll need to work with a Qualified Intermediary (QI). Before selling your property, you'll enter an exchange agreement with the QI and set up a qualified escrow account at a secure bank. The sales proceeds go into this account, ensuring they're only used for the purchase of the replacement property. 🏦💸 #QualifiedIntermediary #Escrow

Key Timelines:

45 Days: Identify a replacement property in writing or acquire one without written identification.
180 Days: Complete the purchase of the replacement property from the date of the sale of the relinquished property.

The 1031 Reverse Exchange Process 🔄🏘️

Prefer to buy first and sell later? The 1031 reverse exchange offers the same tax benefits but with a twist. The IRS provides “safe harbors” for structuring these exchanges. There are two types:

1. Exchange Last: The QI acquires title to the replacement property and “parks” it until you sell your relinquished property.

2. Exchange First: The QI acquires title to the relinquished property and “parks” it until you acquire the replacement property.

Key Timelines:

45 Days: After parking the replacement property, identify or sell your relinquished property.
180 Days: From the parking of the replacement property, complete the sale of the relinquished property.

🏢💼 #1031Exchange #RealEstateInvestment

Need more help? I’m an experienced Commercial Real Estate Broker, please feel free to reach me at 281-222-0433.

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Bill Rapp, CRE Broker

I am a Houston commercial broker, with residential experience, as well as a lending background. I have been in the real estate industry for 14 years and counting, and I have worked in many roles within the industry and each has given me a unique perspective of the industry as a whole. My dedication to clients is rooted in this industry knowledge, but also includes my desire to go the extra mile in networking to source off market opportunities for my clients. Me and my team at eXp Commercial have a cutting-edge technology package that gets the widest exposure for each transaction. eXp Commercial offers a nationwide network through which we can deliver the best exposure and professional advice to achieve our clients’ goals while also minimizing their risk. Clients appreciate my methodical method of discovery in our initial consultation. Through which we can get to know each other and their specific’s business’s needs and objectives on a granular level. Our processes help navigate each transaction and its potential pitfalls through to a successful outcome for our clients. It is my stated goal to provide our clients with extensive market analysis and expertise that fosters innovative solutions and rewarding commercial real estate opportunities.

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