Capital 1031 Services

STRAIGHT DEFERRED EXCHANGES
Generally no gain or loss will be recognized on the exchange of real estate held for productive use in a trade or business or for investment if such property is exchanged solely for real estate which is also to be held either for productive use in a trade or business or for investment. However, like kind property generally does not include the following: Stock in trade or other property held primarily for sale; stocks, bonds, or notes; other securities or evidences of indebtedness or interest; interests in a partnership; certificates of trust or beneficial interests; or choses in action.

Deferred Exchanges under IRS Section 1031 seem relatively straight forward, yet there are a myriad of rules that must be followed and documented to ensure a valid exchange has occurred. Some of these rules are set forth in the IRS code and regulations, others have become standards in the industry based upon case law, or an IRS Letter Ruling. It is imperative that any taxpayer performing a 1031 exchange enlist a QI who knows the rules, and will ensure that their exchange documents are compliant with IRS Regulations. There are four basic rules that must be followed on every exchange:

Select a Qualified Intermediary to prepare the operative documents and hold the proceeds;
Sell your relinquished property to begin an exchange;
Identify replacement property within 45 days; and
Close on the replacement property within 180 days.

In order to comply with IRS Regulations, your tax advisor and QI should help guide you through the 1031 exchange landscape.