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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.
When you look at how things used to be done in the old days, real estate today is much more complicated in many ways. There are more types of ways to get involved with real estate, and more diverse deal opportunities. The 1031 exchange strategy is part of this – so are TIC and DST exchange deals.
The essence of a 1031 exchange deal is that you save money on taxes – but that's easier said than done. Without the right kinds of strategy and compliance, people who set out to do 1031 exchanges can run into serious roadblocks. Some of these have to do with like kind property requirements – when you run afoul of these, you tend to get in trouble with the IRS. In exchange properties simply have to be of like kind as defined by the jurisdiction; for example in NYC a coop can be exchanged, in Texas Mineral rights an be exchanged and in West Virginia timber rights can be exchanged.
Those who are contemplating a 1031 exchange deal should know all of the requirements and make sure they comply, including using a qualified intermediary, conforming to time frame requirements, and making sure properties in question are like kind.
If your names are on the title and not some generic business entity, you can take the proceeds from the deal to exchange into another property. Make sure that the second property is of equal or greater value than the initial property that you bought from your partner, i.e. if there is $30,000 of debt and $100,000 of cash you need to replace $130,000 of which $100,000 must be cash. All $130,000 can be cash.
In terms of 1031 exchanges, like kind involves exchanging real property. Effective January 1, 2018, exchanges of machinery, equipment, vehicles, artwork, collectibles, patents and other intellectual property and intangible business assets generally do not qualify for non-recognition of gain or loss as like-kind exchanges
You need your old tax records. Contact the IRS and retrieve the 1992 filing. You need formal proof of your cost basis which the 1992 tax return should give you. The expenses during the time you held the property do not affect your basis. With the 1992 information you can calculate the profit. You can then pay taxes or execute another exchange. Either way you need to know you basis!!
Coming into the real estate business with experience in property management and leasing, Marilee Hill has been actively advising dealmakers on 1031 exchanges for years. As a FINRA certified real estate professional, she is knowledgeable in series 7 licensing and everything else that goes along with these sorts of real estate deals. When you need great information about qualifying intermediaries or anything else, come to Marilee Hill and let her help you to start the process and get all of your ducks in a row.