Specifically, you have 45 days from the date you relinquish your asset to find a “like-kind” replacement. And, you have 180 days from the date you relinquish Real Estate A to close on that replacement Real Estate B. These timelines are chiseled in IRS stone, with no exceptions.
Who is an exchange accommodator in Section 1031?
1. “What Is An Exchange Accommodator” Today we’re talking with David Moore, co-founder of Equity Advantage, a firm that specializes in tax-deferred investments, in particular, IRS Section 1031 exchanges. David, what is an exchange accommodator?
Can a 1031 exchange defer capital gains taxes?
A 1031 Exchange allows an investor to “defer” paying capital gains taxes on an investment property when it is sold, as long as another “like-kind property” is purchased with the profit gained by the sale of the first property.
What is an exchange accommodator in real estate?
Intermediary, accommodator, facilitator actually will allow somebody and literally sell a property, go out and buy a new property, and as long as that person fits within the timelines and the Safe Harbors provided in the Internal Revenue Code, we can actually make that sale and purchase up to 180 days later and make an exchange out of it.
Do you have to pay capital gains on 1031 exchange?
It doesn’t eliminate your capital gains tax. Only if you never sell your 1031 exchanged property or keep on doing a 1031 exchange, will you never incur a tax liability. You can pass on your property to your children who get to step-up the value to current market value. This way they never have to pay taxes on your property either.
Can a 1031 exchange apply to a former primary residence?
The 1031 provision is for investment and business property, although the rules can apply to a former primary residence under certain conditions.
What happens if you mess up on a 1031 exchange?
If you mess up, the IRS could decide you don’t quality for a 1031 exchange and send you a huge tax bill. So make sure you know how it works. If you’re in doubt, consult an accountant or real estate agent for more details. For more information on 1031 exchanges, go to IRS.gov.
