do I HAVE to buy target property

[Jason Lucas]

When doing a 1031 exchange, I know I have to target 3 properties. I heard that I do not have to buy one of those 3, I can buy a different property not targeted, is this true?

[Margo McDonnell]

You must acquire a property that has been properly identified within the 45-day identification period. Once the 45th day has passed, you cannot change your identification and using the funds to acquire an alternative property will result in a tax liability. When selling your PA property, please remember that the Commonwealth of Pennsylvania does not recognize a 1031 exchange (except for c-corps which follow the federal code). Currently, an individual PA taxpayer would owe 3.07% to the Commonwealth but there is talk that the rate will increase. Fortunately you still have the opportunity to defer the federal gains.