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Everything You Need To Know About The 1031 Exchange
If the replacement property is of lesser value than the property sold, then the difference is taxable.
You may wish to diversify your assets.
You may be seeking a property that has better returns.
You may want to consolidate several properties into one or divide a single property into several.
You may want to reset the deprecation clock.
Property Use – Both the old and new property must qualify as business or investment use. The general holding period is for at least 1 year.
45-Day Rule – You must identify a replacement property in writing within 45 days.
200% Rule – The total value of the replacement properties must not exceed 200% of the value of the original property.
180-Day Rule – You must complete the transaction within 180 days of the filing date of your tax return, whichever is earlier.
Qualified Intermediary – You must use a qualified intermediary to facilitate the transaction. They hold the funds and oversee the 1031 Exchange. They can have no formal relationship with the parties of the exchanging properties.
Title Holding – The title of the replacement property must be the same as the original property.
Reinvestment Requirement – The replacement property must be equal or higher value to the original property to defer all of the capital gains tax.
Descriptions of the properties exchanged
Dates that properties were identified and transferred
Any relationship between the parties to the exchange
Value of the like-kind and other property received
Gain or loss on sale of other (non-like-kind) property given up
Cash received or paid; liabilities relieved or assumed
Adjusted basis of the like-kind property given up; realized gain
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