Since 1921, the rules for qualifying and completing 1031 like-kind exchanges are in all areas of commerce. Like-kind exchanges are a tax deferral, NOT a tax avoidance. By deferring the taxes, property owners can reinvest that money back into the economy by applying the money towards a productive property, creating jobs for entry-level to top executive employees, housing opportunities, and more.
A Accruit requires the taxpayer to indicate how many properties they intend to acquire. Once those transactions are complete, the funds can be returned.
Early Release of Funds
If a taxpayer decides not to move forward with an exchange, they must acknowledge to their QI that they understand they will pay all applicable taxes on the gain. Even so, exchange facilitators are only permitted to disburse funds at particular times for particular reasons. The only time someone can terminate an exchange early is at the end of the 45-day identification period. If the taxpayer has not identified a single property by 45 days, they can close their exchange, and the funds can be disbursed. If the taxpayer has identified any property, funds must be held until the transaction is complete or at the end of the 180-day exchange period. Suppose an exchange facilitator is found to be deviating from the rules. In that case, failure to comply with regulation could jeopardize any of this taxpayer’s previous exchanges and any other exchanges facilitated by the company.
1031 Exchange Timeline
“Can I start a 1031 exchange after I’ve sold my property?” or “I just closed on my property; can I still do an exchange?” There are a few variations to this question, but ultimately the answer is always the same. Once you’ve sold and closed on a property, it is no longer eligible for exchange. The taxpayer cannot take actual possession or control the net proceeds from the sale of a relinquished property in a 1031 exchange. An exchanger must contact a QI before selling their property. If you find yourself short on time or at the closing table, don’t lose hope with processing an exchange. With Accruit’s patented software, Exchange Manager Pro℠, we can get you set up for a rush exchange in under an hour.