Start 1031 exchange after sale of property is already in progress

Rental Property Investor · Lancaster, CA · Member since 2015 · 103 posts · 55 votes

Selling a property I rehabbed a couple of years ago. I've accepted an offer and the process of the sale has started. Didn't think I was going to do a 1031 exchange because I was going to use the money for repairs on another property. Found a property I like though and want to do a 1031 exchange on it. Is it too late to start the 1031 paperwork?

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Lisa Taylor

Financial Advisor · Minneapolis MN 55405 · Member since 2019 · 30 posts · 5 votes

right now it is critical for doing 1031 exchange can you contact 1031 sponsors exchange expert or any Qualified Intermediary

thanks with regard

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Lisa Taylor
Financial Advisor · Minneapolis MN 55405 · Member since 2019 · 30 posts · 5 votes
7y
right now it is critical for doing 1031 exchange can you contact 1031 sponsors exchange expert or any Qualified Intermediary
thanks with regard

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Matthew McNeil
Rental Property Investor · Boise/Portland · Member since 2017 · 709 posts · 742 votes
7y
Originally posted by @Steve Graves:

Selling a property I rehabbed a couple of years ago. I've accepted an offer and the process of the sale has started. Didn't think I was going to do a 1031 exchange because I was going to use the money for repairs on another property. Found a property I like though and want to do a 1031 exchange on it. Is it too late to start the 1031 paperwork?
Steve, its not too late. From the time of closing on the asset you sold, you have 45 days to identify a potential replacement (like-kind) property and 180 days to acquire the replacement property. I've walked through a few Exchanges and I've always used my Title Company as the Qualified Intermediary. Its far easier than I initially thought. They take care of everything.
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
7y
@Steve Graves, You've got time. the critical element is that the intermediary must be in place before the sale closes. As long as that hasn't happened you're fine. We've been able to close them in less than a half hour (with a lot of wailing and gnashing of teeth). Do your title company a favor and let them know now so they aren't surprised at the last minute. They're usually the ones most disadvantaged in the process.
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Tom Bertz
Accountant · Morgantown, PA · Member since 2017 · 14 posts · 15 votes
7y
Just another option to review with your CPA is - with new tax law and bonus depreciation you maybe able to get similar results as a 1031 without some of the headaches.
With taxes it does depend on your individual situation.
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Steve Graves
OP
Rental Property Investor · Lancaster, CA · Member since 2015 · 103 posts · 55 votes
7y
@Matthew McNeil @Lisa Taylor @Dave Foster Thanks everyone, calling the title company I've used in the past first thing tomorrow morning to set it up.
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Matthew Ryan
Developer · San Francisco, CA · Member since 2015 · 103 posts · 47 votes
7y
@Steve Graves - Something to keep in mind should you fail to meet the 1031 timeframes is you can also invest your capital gain into a qualified opportunity zone fund and receive similar tax benefits. You'll have 180 days from the date of the closing to invest in a fund or one-off investment. Depending on whether you're looking to invest passively or to work alone will guide the additional steps needed to qualify for the very substantial tax break. A key factor in all of this is if you keep your capital gain in your investment for ten years, you pay zero capital gain at the sale. No 1031 needed. If you would like more info, DM with your scenario and I can give you better guidance.
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