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.
