Tag: section 1031

https://www.accruit.com/sites/default/files/2022-01/1031-Exchange-Timel…;

 
 
 
 
 
IRC Section 1031 has been around for more than 100 years. Although the overall concept and purpose of reverse 1031 exchange, sometimes called a forward exchange. The main difference is that instead of the QI holding funds, they hold a property. After hiring the qualified intermediary, the taxpayer and QI will open an LLC that will act as the Exchange Accommodation Titleholder (EAT), which will hold the replacement property as the taxpayer sells the relinquished property. Once the EAT has taken the title of the new property, the exchanger has 45 days to identify the property they will be selling. After the initial 45 days, the taxpayer has the remaining 135 days of the total 180 to sell the property they identified and finalize the exchange.
Build-to-Suit or Improvement Exchange
There are times when a taxpayer would like to sell a property and exchange it for a property they would like to develop or improve. Build-to-suit exchanges refer to exchanges in which improvements are made on the property acquired. In a build-to-suit or improvement exchange, the taxpayer can sell their property to purchase and improve a new property or purchase the replacement property first and then use the funds from the sale of the relinquished property to pay back loans used to fund the initial purchase and improvements. In both cases, the taxpayer has 180 days to use the balance of funds to improve the property. Any funds that have not been used during the parking period are considered real estate “boot” and are subject to capital gain tax. The 180-day time limit begins when the EAT, set up with the QI before the exchange, assumes title of the property.
1031 Exchange Timeline Considerations
Following the timeline on a 1031 exchange is not always as easy as it sounds. A taxpayer may not be able to identify a suitable property to buy in the 45-day identification period. A taxpayer may not be able to sell their property within 180 days. Improvements on a property may take longer than 180 days. Once a safe harbor provision is not met, the exchange is no longer eligible for tax deferment. 
Here are a few ways of setting yourself up for a successful exchange: 

If you want to begin a forward exchange, start looking for your replacement property as early as possible
You can stretch out this extra period by delaying the close date on your relinquished property, preventing your 45-day countdown from starting
If you have already identified a property you would like to purchase but have not been able to sell your current property, consider a reverse exchange. That way, you will ensure your purchase and have 180 days to sell the old property
To avoid unwanted delays that may cut your 1031 exchange timeline short, ensure that your financing is in order before entering into an exchange agreement

https://www.accruit.com/sites/default/files/2022-01/1031-Exchange-Timel…;

 
 
 
 
 
IRC Section 1031 has been around for more than 100 years. Although the overall concept and purpose of reverse 1031 exchange, sometimes called a forward exchange. The main difference is that instead of the QI holding funds, they hold a property. After hiring the qualified intermediary, the taxpayer and QI will open an LLC that will act as the Exchange Accommodation Titleholder (EAT), which will hold the replacement property as the taxpayer sells the relinquished property. Once the EAT has taken the title of the new property, the exchanger has 45 days to identify the property they will be selling. After the initial 45 days, the taxpayer has the remaining 135 days of the total 180 to sell the property they identified and finalize the exchange.
Build-to-Suit or Improvement Exchange
There are times when a taxpayer would like to sell a property and exchange it for a property they would like to develop or improve. Build-to-suit exchanges refer to exchanges in which improvements are made on the property acquired. In a build-to-suit or improvement exchange, the taxpayer can sell their property to purchase and improve a new property or purchase the replacement property first and then use the funds from the sale of the relinquished property to pay back loans used to fund the initial purchase and improvements. In both cases, the taxpayer has 180 days to use the balance of funds to improve the property. Any funds that have not been used during the parking period are considered real estate “boot” and are subject to capital gain tax. The 180-day time limit begins when the EAT, set up with the QI before the exchange, assumes title of the property.
1031 Exchange Timeline Considerations
Following the timeline on a 1031 exchange is not always as easy as it sounds. A taxpayer may not be able to identify a suitable property to buy in the 45-day identification period. A taxpayer may not be able to sell their property within 180 days. Improvements on a property may take longer than 180 days. Once a safe harbor provision is not met, the exchange is no longer eligible for tax deferment. 
Here are a few ways of setting yourself up for a successful exchange: 

If you want to begin a forward exchange, start looking for your replacement property as early as possible
You can stretch out this extra period by delaying the close date on your relinquished property, preventing your 45-day countdown from starting
If you have already identified a property you would like to purchase but have not been able to sell your current property, consider a reverse exchange. That way, you will ensure your purchase and have 180 days to sell the old property
To avoid unwanted delays that may cut your 1031 exchange timeline short, ensure that your financing is in order before entering into an exchange agreement

https://www.accruit.com/sites/default/files/2022-01/1031-Exchange-Timel…;

 
 
 
 
 
IRC Section 1031 has been around for more than 100 years. Although the overall concept and purpose of reverse 1031 exchange, sometimes called a forward exchange. The main difference is that instead of the QI holding funds, they hold a property. After hiring the qualified intermediary, the taxpayer and QI will open an LLC that will act as the Exchange Accommodation Titleholder (EAT), which will hold the replacement property as the taxpayer sells the relinquished property. Once the EAT has taken the title of the new property, the exchanger has 45 days to identify the property they will be selling. After the initial 45 days, the taxpayer has the remaining 135 days of the total 180 to sell the property they identified and finalize the exchange.
Build-to-Suit or Improvement Exchange
There are times when a taxpayer would like to sell a property and exchange it for a property they would like to develop or improve. Build-to-suit exchanges refer to exchanges in which improvements are made on the property acquired. In a build-to-suit or improvement exchange, the taxpayer can sell their property to purchase and improve a new property or purchase the replacement property first and then use the funds from the sale of the relinquished property to pay back loans used to fund the initial purchase and improvements. In both cases, the taxpayer has 180 days to use the balance of funds to improve the property. Any funds that have not been used during the parking period are considered real estate “boot” and are subject to capital gain tax. The 180-day time limit begins when the EAT, set up with the QI before the exchange, assumes title of the property.
1031 Exchange Timeline Considerations
Following the timeline on a 1031 exchange is not always as easy as it sounds. A taxpayer may not be able to identify a suitable property to buy in the 45-day identification period. A taxpayer may not be able to sell their property within 180 days. Improvements on a property may take longer than 180 days. Once a safe harbor provision is not met, the exchange is no longer eligible for tax deferment. 
Here are a few ways of setting yourself up for a successful exchange: 

If you want to begin a forward exchange, start looking for your replacement property as early as possible
You can stretch out this extra period by delaying the close date on your relinquished property, preventing your 45-day countdown from starting
If you have already identified a property you would like to purchase but have not been able to sell your current property, consider a reverse exchange. That way, you will ensure your purchase and have 180 days to sell the old property
To avoid unwanted delays that may cut your 1031 exchange timeline short, ensure that your financing is in order before entering into an exchange agreement

Since 1921, the rules for qualifying and completing “Like-Kind” 
Must Follow Exchange Time Limit & Identification Requirement
Properties Must Be Held for Business or Investment Purposes
Exchange Must Be Equal or Up in Value:

To potentially defer all of the taxable gain, a property owner must first reinvest all of the equity in the relinquished property into the replacement property. Second, the purchase price of the property acquired must equal or exceed the sale price of the relinquished property.  Typically, this requires debt on the new property to equal or exceed the debt that is paid off on the relinquished property.

Identification Rules: The 3-Property Rule
The 3-property rule states that the replacement property identification can be made for up to three properties, meaning that an exchanger may identify more than one alternate property to be received in an exchange. The taxpayer can identify and purchase up to three replacement properties after relinquishing their initial property to the qualified intermediary, like Accruit. The amount totaled at the end of the identification is not relevant to the requirements of 1031 exchange rules in Florida or Kentucky? It is strongly recommended that you discuss your exchange with your tax and legal advisors along with a qualified intermediary. Accruit’s leadership team has over 200 years of combined experience working with taxpayers and their advisors in structuring successful 1031 exchanges.
At

Since 1921, the rules for qualifying and completing “Like-Kind” 
Must Follow Exchange Time Limit & Identification Requirement
Properties Must Be Held for Business or Investment Purposes
Exchange Must Be Equal or Up in Value:

To potentially defer all of the taxable gain, a property owner must first reinvest all of the equity in the relinquished property into the replacement property. Second, the purchase price of the property acquired must equal or exceed the sale price of the relinquished property.  Typically, this requires debt on the new property to equal or exceed the debt that is paid off on the relinquished property.

Identification Rules: The 3-Property Rule
The 3-property rule states that the replacement property identification can be made for up to three properties, meaning that an exchanger may identify more than one alternate property to be received in an exchange. The taxpayer can identify and purchase up to three replacement properties after relinquishing their initial property to the qualified intermediary, like Accruit. The amount totaled at the end of the identification is not relevant to the requirements of 1031 exchange rules in Florida or Kentucky? It is strongly recommended that you discuss your exchange with your tax and legal advisors along with a qualified intermediary. Accruit’s leadership team has over 200 years of combined experience working with taxpayers and their advisors in structuring successful 1031 exchanges.
At

Since 1921, the rules for qualifying and completing “Like-Kind” 
Must Follow Exchange Time Limit & Identification Requirement
Properties Must Be Held for Business or Investment Purposes
Exchange Must Be Equal or Up in Value:

To potentially defer all of the taxable gain, a property owner must first reinvest all of the equity in the relinquished property into the replacement property. Second, the purchase price of the property acquired must equal or exceed the sale price of the relinquished property.  Typically, this requires debt on the new property to equal or exceed the debt that is paid off on the relinquished property.

Identification Rules: The 3-Property Rule
The 3-property rule states that the replacement property identification can be made for up to three properties, meaning that an exchanger may identify more than one alternate property to be received in an exchange. The taxpayer can identify and purchase up to three replacement properties after relinquishing their initial property to the qualified intermediary, like Accruit. The amount totaled at the end of the identification is not relevant to the requirements of 1031 exchange rules in Florida or Kentucky? It is strongly recommended that you discuss your exchange with your tax and legal advisors along with a qualified intermediary. Accruit’s leadership team has over 200 years of combined experience working with taxpayers and their advisors in structuring successful 1031 exchanges.
At

Like-kind exchanges provide benefits to sellers of agricultural property under 1031 like-kind exchange. The fact is you can buy any real property such as farm, ranch, apartment complex, commercial building, or rental home used for trade, investment, or businesses purposes. These rules allow agricultural property owners to diversify their investments and grow a wider range of assets. Without 1031 tax deferred exchange, agricultural property owners will be held responsible for paying taxes on the property being sold, even if they reinvest and purchase new property.
What can Agricultural Property Owners Exchange with 1031?
Agricultural property owners can exchange labor, chemical, and water intensive land into less management intensive property such as residential or office condominiums. Or they can exchange conservation easements on their ranch land to acquire new property.
For example:
Recently a client sold two easements on his agricultural land. One of the easements restricted his ability to use the wells on his land. This helps keep water in the underground aquifers and permits more water to flow further downstream for other users. The second easement restricted his ability to use chemical fertilizers on his land. The societal benefit here is that fewer chemicals being applied to the land mean fewer chemicals running into the streams, polluted the water, and killing the fish. The cash generated by the sale of the easements was used to acquire a few single-family homes nearby, which will be used as VRBO/Airbnb type rentals.
 
Time is of the essence when it comes to Selling and Obtaining Real Property
Timing is crucial when it comes to selling and acquiring real property in a Section 1031 gives the seller 180-days to replace their property when exchanging into another real property.
Why am I doing a 1031 tax deferred exchange?

Diversify your portfolio

Rather than having all of your funds locked into one large property, you can reinvest into multiple properties of different asset classes (residential, commercial, retail, etc.).
Rather than having all of your funds locked into one location, you can reinvest across town, or across the country, to take advantage of stronger opportunities.
Spread assets into smaller investments as party of an estate plan.

Upgrade or consolidate your portfolio

Rather than having your investments scattered across the county, consolidate into fewer, larger properties.

For more information, https://www.accruit.com/contact-us”>contact Accruit and subscribe to our https://www.accruit.com/blog/”>blog

Like-kind exchanges provide benefits to sellers of agricultural property under 1031 like-kind exchange. The fact is you can buy any real property such as farm, ranch, apartment complex, commercial building, or rental home used for trade, investment, or businesses purposes. These rules allow agricultural property owners to diversify their investments and grow a wider range of assets. Without 1031 tax deferred exchange, agricultural property owners will be held responsible for paying taxes on the property being sold, even if they reinvest and purchase new property.
What can Agricultural Property Owners Exchange with 1031?
Agricultural property owners can exchange labor, chemical, and water intensive land into less management intensive property such as residential or office condominiums. Or they can exchange conservation easements on their ranch land to acquire new property.
For example:
Recently a client sold two easements on his agricultural land. One of the easements restricted his ability to use the wells on his land. This helps keep water in the underground aquifers and permits more water to flow further downstream for other users. The second easement restricted his ability to use chemical fertilizers on his land. The societal benefit here is that fewer chemicals being applied to the land mean fewer chemicals running into the streams, polluted the water, and killing the fish. The cash generated by the sale of the easements was used to acquire a few single-family homes nearby, which will be used as VRBO/Airbnb type rentals.
 
Time is of the essence when it comes to Selling and Obtaining Real Property
Timing is crucial when it comes to selling and acquiring real property in a Section 1031 gives the seller 180-days to replace their property when exchanging into another real property.
Why am I doing a 1031 tax deferred exchange?

Diversify your portfolio

Rather than having all of your funds locked into one large property, you can reinvest into multiple properties of different asset classes (residential, commercial, retail, etc.).
Rather than having all of your funds locked into one location, you can reinvest across town, or across the country, to take advantage of stronger opportunities.
Spread assets into smaller investments as party of an estate plan.

Upgrade or consolidate your portfolio

Rather than having your investments scattered across the county, consolidate into fewer, larger properties.

For more information, https://www.accruit.com/contact-us”>contact Accruit and subscribe to our https://www.accruit.com/blog/”>blog