8 Steps to a Tax Deferred Exchange Success
(Provided by Exchange Services, Inc)
A 1031 Tax-deferred Exchange is: Selling real property held or used for investment and using the proceeds to:
Acquire like-kind property by investing all proceeds from the sale and purchasing something of equal or greater value with equal or greater debt, therefore, deferring capital gains tax.
Sale of Relinquished Property:
1. List Property: List the property with a licensed real estate agent.
2. Buyer Cooperation: In the purchase and sales agreement for the RELINQUISHED property, include the “intent to exchange” disclosure which gives notice to buyer of the exchange.
3. Contact Accomodator: When escrow is opened on relinquished property, just call your company to start exchange process.
4. Relinquished Property Closing: For your convenience, most accomodators will deliver all exchange documents to escrow. This insures the exchange documentation is in place prior to closing.
Purchase of the Replacement Property:
5. Identification Deadline: Within 45 days of the close of the relinquished property, notify accomodator in writing of up to 3 “like-kind” properties in which you may be interested in purchasing as your replacement property. You may close on any one, two or three of these properties.
6. Seller Cooperation: In the Purchase and Sales Agreement, for the replacement property, include the “intent to exchange” disclosure which gives notice to the Seller of the exchange.
7. Replacement Properties: Notify accomodator when escrow is opened on the exchange property, they will prepare and deliver the remaining exchange documents to escrow.
8. Acquisition Date: You must close escrow on one, two or three of the identified properties prior to either the 180th day from the transfer of relinquished properties or property or April 15 of the following year the relinquished property was sold, whichever comes first. An extension to your return may be filed to take advantage of your 180 days.
I am happy to provide you with additional information on a Section 1031 Tax Deferred Exchange. Please email me now!
I am an Associate Broker with Teton Valley Realty. I have been a licensed REALTOR® for twelve years and actively involved with property sales and development in Teton Valley.
I have lived in Teton Valley for over 20 years and feel fortunate to have made a home here with my husband, Travis, and two children, Conley and Arah. 