1031 Exchange too 3 Factors??

Question

I had an investor contact me yesterday and ask what are the most important things to know about a 1031 E?   He is looking to pick up a 24-unit that I have available. I told him the two important dates are 1.identifying a property(90 days after close of the sale of his property) and 2. Closing on the new acquisition(180 days). What are the top 3 things to know about a 1031 E?  Asking for a friend😂😂👍🏾

Jaysen Medhurst · Answer

@Shawn Ackerman:

• Purchase price must be equal to or greater than the sale property being sold.
• All profits must be reinvested into the new property to defer capital gains taxes.
• Profit will be determined on an adjusted-cost basis after taking into account the depreciation that has been already claimed.
• BONUS (and most important): Get yourself a great Qualified Intermediary (QI). @Dave Foster is where you want to start.

Kyle Kadish · Answer

@Shawn Ackerman. Identification is 45 days, not 90.

Ryan Thomas · Answer

@Shawn Ackerman - The identification period is only 45 days from the date the relinquished property is sold. You are correct that the entire exchange is 180 days.

An important thing to remember is that the underlying tax owner on the relinquished property needs to remain the underlying tax owner on the replacement property.

Dave Foster · Answer

@Shawn Ackerman, The single most important thing you need to point him toward with a 1031 is the requirement to use a QI to consult guide and perform the 1031.  I'm not sure of your relationship with him.  You may be looking at doing a 1031 and he's looking for ways to help you  to create a win-win or to take advantage of what he learns to his advantage.  In either case you don't want the liability (as evidenced by the confusion over the 45 day identification period  above).  You put yourself at a disadvantage perceptually and maybe actually if they hear something from you that indicates a weakness  or if they take action based on your recommendation and end up getting burnt and suing (yes I"m probably being overly Machiavellian today but I've seen it happen so indulge me :)

Simply tell them the most important factor is they use an unrelated 3rd party called the Qualified Intermediary to handle an exchange and steer them to one.  You've helped them out but not revealed anything on your side that could be misinterpreted or taken advantage of.

Shawn Ackerman · Answer

@Ryan Thomas thanks man. Great info!!

Shawn Ackerman · Answer

@Jaysen Medhurst Thanks for the info my man!!!

Shawn Ackerman · Answer

@Kyle Kadish thanks for the education. Fair to say the closing date is 180 days?

1031 Exchange too 3 Factors??

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