Timing, Part 4

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Timing, Part 4

Quickly, here's some of the good and bad on 1031 exchanges. As far as limitations, there is a mandatory 45 day identification, and 135 days plus for settlement. That starts as soon as you get rid of your initial property, and it's a hard and fast rule.

On the other hand, you can write a contract anytime before settlement for a replacement property. That means if you handle this correctly, you'll be ahead of the game when it's necessary. However, if you waffle around, you're likely to get in trouble.

A 1031 real estate exchange deal relies on multiple stakeholders. It requires a detailed process. Having good professional assistance is key.

Question 1:
How long do we have to turn around our sale money so as not to pay taxes. I am unable to talk on the phone\nI have no voice due to cancer. Please e-mail me.

Answer:
The replacement property must be held for two years. The property needs to be viably utilized during the two years — as in rented or trying to rent or fixing up to rent. That’s the necessaries. On your tax return you need to fill out Form 8824.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Want a registered representative with a series 7 license and knowledge of reg D of the security act of 1933? Marilee Hill provides exceptional free advice on 1031 exchange deals as a former real estate broker with 20 years in the industry. She knows about the people side of the business as well as the timeline, IRS regulations and relevant technical details. Come to Marilee Hill to help you with an existing 1031exchange plan when you have to get all your ducks in a row before you head toward settlement.

Timing, Part 3

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Timing, Part 3

A 1031 exchange isn't usually simple. There's a lot of learning and planning involved. You have a 45 day identification period for listing properties. There are an additional 135 day settlement time. Real estate is real estate and the 45 days is critical — if your identified properties all disappear you have no exchange. Preferably, identify and settle during the 45 days. That’s just some of the timeline rules and the IRS has mandated many other time relevant regulations for 1031 deals.

Yes, the IRS extended its 45 day identification period for events such as 9/11 and major stormdamage on the East Coast – but in general, these rules are pretty ironclad, so it pays to not mess around when you're trying to achieve a 1031 exchange deal.

However, there is some wiggle room in terms of writing a contract. Essentially, you can write a contract anytime before settlement on a replacement property in a 1031 exchange.

One of the key pieces is collaboration – you'll have to work with sponsors and other stakeholders to make the deal work.

Question 1:
Sean with house ready to sell $139,000. Tammy many rental houses wants to buy it. has one rental house for sell $84,000. Sean wants money now but doesn't Tammy have to sell hers first to meet the 45 day rule. Tammy will have to give additional $55,000 in cash so does boot disallow 1031 exchange?

Answer:
This sort of convoluted program isn't likely to happen. There is a reverse exchange — given the expense of a reverse exchange it doesn't sound like this is going to fit into that classification.

Question 2:
All cash offer in Escrow, need a 1031 exchange trust to receive and hold cash paid for beach property sold, need time to look for beach property in Cambria or Shell Beach CA. G.T.

Answer:
So after closing escrow, you have a 45 day period to identify properties. It's important to have financing lined up and be ready to move quickly when escrow is closed. Sometimes you can try to delay closing escrow, but it's best to have all your ducks in a row.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Marilee Hill knows about 1031 exchange processes – as a 20 year real estate professional, she is able to help offer clients advice on exchange replacement properties and regulations such as reg D of the Security Exchange Act of 1933.

Marilee Hill is a registered representative with a series 7 license who can help with the preliminary work of understanding what to do with a 1031 exchange deal. Then there's a qualified intermediary service that generally charges $600-$1000 or more to help achieve the deal. Marilee Hill’s services, on the other hand, are free.

Timing, Part 2

The questions here were received from interested 1031 exchangers visiting my website. I have chosen to leave the questions intact with their ambiguity, shorthand writing and misspellings so as not to act on the assumption as to what when unclear the questioner meant.

Timing, Part 2

A successful 1031 exchange requires quite a lot of learning and planning. There’s a mandatory prerequisite 45 day identification period and additional 135 day settlement time with the clock starting to tick the day you relinquish your property. These are just some of the hard and fast rules that parties must follow to stay on the good side of the IRS.

The timelines are inscribed in granite — and then after the horrific events of 9/11, the IRS issued a nationwide exception extending the 45 day identification rule and the settlement deadline for the entire United States. Since then, the IRS has expanded its exceptions for major natural disasters. Don’t dawdle.

Even with keeping track of compliance with mandatory timelines, the good news is you can write a contract any time before settlement for your replacement property. Sponsors have to consider timing issues for replacement property settlements. So get in line quickly.

Looking for guidance on when to file your tax return for your sale property, or advice on complex property deals? A 1031 exchange often involves more than one stakeholder as it moves toward completion, so having the right partners in your corner is a big plus.

Question 1:
Can I buy the new property before I sell and close on the (old) exchange property.

Answer:

Yes, you can – this kind of deal is called a reverse exchange; it’s complicated, and fees start at around $5,000. You’ll need a Qualified Intermediary who Is also an EAT to accomplish the reverse exchange.

Question 2:
Advise timing to complete a 1031 agreement

Answer:
Planning is of utmost importance for a successful 1031 exchange, and a Qualified Intermediary agreement is essential . The QI agreement is a standard that helps to legitimize a deal. The best time to hire a QI is when you have a valid contract for the property you are selling.

About Marilee: Role of Marilee Hill, Registered Representative (RR)

Marilee Hill has a good deal of experience in facilitating successful 1031 deals. As a broker licensed in multiple states, Hill has presided over a high volume of property exchanges and other real estate transactions, with a track record of establishing a high rate of success for clients.

As a broker with general securities (Series 7) license from FINRA and other key credentials and a background in real estate, Hill can help to bring clients through complex and sophisticated deals, such as deals involving more than one parcel, or TICs, or advanced real estate trading situations.

Ask Marilee Hill about what you can do with a 1031 exchange in today’s market.