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.
To achieve a successful 1031 exchange, the most important thing is time spent learning and planning in advance of writing a contract on the property you are selling.
The prerequisite 45 day identification period and additional 135 day settlement time are set in stone, and can only be changed by the IRS.
For example, in 2001, Merrill Lynch was financing a property being offered by one of my Sponsors. The Merrill Lynch offices were across the street from the World Trade Center!! The IRS issued a nationwide exception to both the 45 day identification rule and the settlement deadline.
Subsequently, the IRS has issued local exceptions for major natural disasters. There are timing issues as to when to write contracts for your replacement properties, when to file your tax return for your sale property, and how to apply the time rules when contributing multiple sale properties to the purchase of one property. There are additional time issues related to the Reverse Exchange and holding periods for your acquired property to qualify for a 1031 exchange.
When does the 45 day rule start ? At closing or at funding ?
The 45 day rule starts when the benefits and burdens pass from the Seller to the Buyer. For example, if this occurs on March 3rd, the 45 days start on March 4th
If I sell a house owned by a corporation, purchase another house with all the funds, does the new house have to produce income or can it be held for a certain time for appreciation in value and then sold?\nIs the length of time it is held important, either a short period or long period.
Yes – it is called a reverse exchange. It’s somewhat complicated, and fees start at around $5000. You need a Qualified Intermediary who is also an EAT.
About Marilee: Role of Marilee Hill, Registered Representative (RR)
Marilee Hill got involved in the 1031 exchange field nearly 20 years ago. At the time, she already had a lot of experience working in real estate. After managing her own properties and leasing to tenants, Hill expanded her knowledge about real estate, becoming qualified as a broker in multiple areas.
Marilee Hill knows how important values are in real estate. It’s about more than just technicalities – it’s about transparency, about being there for a customer, about holding uip your end of the deal. Of course, it’s also about providing thought leadership – knowing the terrain of the market and the rules that agents and others play by.
Talk to Marilee Hill about your next 1031 exchange deal.