Buyer participate in 1031?

[Jeff Minser]

Came across a duplex I’m about to run numbers on. In the description “owners may want buyer to participate in a 1031”. I’ve only heard of a 1031 but have not done one. How does a “buyer”partake in a 1031?

[Jeff Copeland]

The buyer does not really have to do anything in particular, other than cooperate. This is more of an announcement to the IRS that the seller intends to participate in a 1031 exchange. 

We have a contract addendum/rider here in Florida that sort of gives notice of the same thing. It states:

1031 Exchange: If either Seller or Buyer wishes to enter into a like-kind exchange (either simultaneously with Closing or after) under Section 1031 of the Internal Revenue Code (“Exchange”), the other party will cooperate in all reasonable respects to effectuate the Exchange including executing documents; provided, however, that the cooperating party will incur no liability or cost related to the Exchange and that the Closing will not be contingent upon, extended, or delayed by the Exchange.

Check out this interview for more info about the 1031 Exchange process.