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.
Exchanging Multiple Properties, Part 3
Exchangers can bundle properties into one lot, observing the closing date of the first property closed as the beginning of an ID period.
However, other rules apply – how the properties are titled, what the timeline is plus the debt to cash ratio all need to be understood before a sale. In selling a property and buying multiple properties, or selling multiple properties to buy one property exchangers have to be able to consolidate the timeline, add up and maintain the debt to cash ratios and make certain all the entities together can do an exchange.
Question:
Do you have to set up an exchange before you sell a property? I plan to sell 1 or 2 and plan to buy 1 does the 1031 need to be set up first? Thx Steve.
Answer:
So you want to sell two properties, and buy a single property with the proceeds? You need to hire a Qualified Intermediary, and the QI’s paperwork must be at the title company before you settle on your first sale property.
You have 45 days from settlement to identify up to three properties. So you must sell your second sale property within the first property’s 45-day identification time frame, to be able to use funds from two sales to buy one property. There are an additional 135 days from the settlement of the first property to settle on your selected purchase. When you are doing a 1031 exchange, there is no restriction on when you can sign the contract for your exchange purchase property. What you want to do involves a lot of planning, and a little luck.
About Marilee: Role of Marilee Hill, Registered Representative (RR)
With a wealth of experience in real estate and 1031 exchanges, Marilee helps people to deal with a complex real estate process. Her long experience with her own properties and having real estate broker licenses in three jurisdictions help.
Marilee likes helping clients to understand the ins and outs of a real estate deal. With her combined more than 20 years as a commercial real estate Broker plus another 20 years with FINRA licenses Marilee has the experience to help clients to plan adequately for a real estate future. Let Marilee help you with a real estate portfolio that needs a guiding strategy in terms of tax regulations and more.
