1031 EXCHANGE INFORMATION REGARDING REAL ESTATE TRANSACTIONS

The best information on this subject is best provided to you by your tax advisor and/or attorney. If you have decided that executing a 1031 (like kind) exchange is the way you want to go, you may want to read more about 1031 exchanges by visiting the  IPX 1031 company website where you may order a free informational cd, there are many other "Qualified Intermediary" companies however.

Once again, be aware that there are many "qualified intermediary" exchange companies and they are not all the same, they are also not nationally regulated, which is a surprise to many people. Make a list of the differences, for example, they are not all insured and the regulations are varied, speak to your tax advisor and then make your decision. Protect your investment, be educated, know your options, ask about guarantees and fees.

Another surprise to many is the meaning of "like kind". According to the tax authorities; "Real properties generally are of like-kind, regardless of whether the properties are improved or unimproved. However, real property in the United States and real property outside the United States are not like-kind properties."

The I R S is the best direct source of your information as the 1031 does pertain to delaying not eliminating taxes on your gains on investment/income property. You may refer to I R S publication 8824 for further explantions.

Simplified, if you decide to make a 1031 exchange either on your home when it is sold or when you are buying, it must be so noted in the documents pertaining to the home sale when they are created, so it is important that you inform your real estate professional as early as possible if this is your intention.  The basic equity will then be handled by the third party exchange company therefore it is important that you have selected your exchange company in advance.

There is a transaction fee involved with a 1031 that usually covers the sale and purchase, this amount of this fee should also be investigated when you are selecting your exchange company.

If during the course of the transaction you should decide to cancel out on the 1031 exchange for any reason, the fee is normally non-refundable.

The most important thing to know about a 1031 exchange is that if you decide this is what you are going to do, the timeframes involved become of utmost importance and that the amount of time you will have to find a suitable replacement property is relatively quite short, therefore careful coordination is necessary. Talk to your real estate professional, keep them informed of your intentions.  ~ Barbara Adams, Realtor