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Monthly Archives: March 2011

Can you exchange with your own property?

Monday, March 21, 2011

In order for a 1031 Exchange to be completed, there must be an exchange of properties. You cannot 1031 Exchange with yourself. Tweet

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Can I take Earnest Money from my sales proceeds?

Monday, March 21, 2011

No.  Your sales proceeds may ONLY be used to purchase 1031 Exchange replacement properties. The best option is to use your own funds for Earnest Money deposits and then get these back at the time of closing. Tweet

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Do you get taxed on a gain in a like kind exchange?

Monday, March 21, 2011

In a 1031 Exchange, you continue your investment by selling your qualified, like-kind property by purchasing another qualified, like-kind property. Any gain you would experience from the sale of your property would be passed on to the future sale of the property or properties that you purchase, so there is no gain or tax to [...]

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Are the 1031 Exchange funds liquid?

Wednesday, March 16, 2011

When you deposit your 1031 Exchange proceeds into your Qualified Intermediary’s trust account, these funds should be kept in a liquid state, meaning that they can be accessed at any time for the purpose of purchasing a Replacement Property. This is a very important question to ask when you are considering hiring a QI and [...]

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How safe in your money in an escrow account for a 1031 Exchange?

Wednesday, March 16, 2011

Qualified Escrow Accounts are about the safest type of account you can have when you are working with a Qualified Intermediary (Realty Exchangers), this is because you QI cannot access any of the money without your knowledge and signature. Also, insist that your QI apply FDIC insurance on all of your proceeds. Few QI’s offer [...]

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What is the procedure for changing my identified property after 45 day period for 1031 exchange?

Wednesday, March 16, 2011

Unfortunately, the IRS did not allow for this, which means once you have identified your 1031 Exchange properties and the 45 days period has expired, you cannot identify anymore or change them, they are locked in. Careful consideration must be taken as you identify to insure that you have identified properties that you know you [...]

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What is the difference between capital gain and equity in a 1031 Exchange?

Tuesday, March 15, 2011

Do not confuse capital gain with equity in your 1031 Exchange. There is no comparison between the two. Equity is the amount of money you have in your pocket after you have sold the property and paid off all related liabilities and mortgages. As an example lets say you bought a property $30,000 ten years [...]

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What are the legal fees associated with a 1031 Exchange?

Tuesday, March 15, 2011

As with any sale of real estate, often tax payers will consult an attorney to facilitate the creation of a Purchase and Sale Agreement for their 1031 Exchange. The fees associated with paying at attorney varies, though most have standard rates. A simple phone call to your attorney can help with this question. There should [...]

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Can a 1031 Exchange be claimed on an amended return?

Tuesday, March 15, 2011

If you filed your tax return before the April tax filing deadline, you still have a chance to file your 1031 Exchange. The most important aspect of this issue is to consider the due dates surrounding your 1031 Exchange. You are expected to close sale on your final identified 1031 exchange replacement property on or [...]

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Is property in Puerto Rico allowed for 1031 Exchange?

Monday, March 14, 2011

1031 Exchange is available to US Taxpayers who are purchasing and buying property in all 50 states of the USA and the US Virgin Islands. Puerto Rico is not mentioned in the IRS code and is considered foreign soil for 1031 Exchange. Which means property in Puerto Rico does not qualify for like-kind treatment in [...]

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