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JLeslie's avatar

Have any jellies done a 1031 Exchange of real estate?

Asked by JLeslie (59212points) June 14th, 2019 from iPhone

Can you tell me how it went?

I have land I’m most likely selling, and I’m thinking of buying a rental property. Is that similar enough that it will count?

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6 Answers

Love_my_doggie's avatar

Over the years, I’ve handled dozens of like-kind exchanges. I’ll tell you two things:

First, you don’t want to get sophisticated tax advice from an online message board. Sec. 1031 transactions are very complex and will collapgse, with bad consequences, if not done correctly.

Second, the exchange isn’t as simple as selling one real estate property and using the proceeds to purchase another property; this describes a taxable event. A tax-deferred, like-kind exchange contains the disposition and acquisition as mutually-dependent parts of an integrated transaction. You’ll need to engage an independent third party (qualified intermediary or accommodator) to handle both sides. The sales proceeds get “parked” with the third party, never held by you, and the third party buys the replacement property on your behalf. So, please don’t sell your land, on your own, thinking that you can roll over the gain into another property.

JLeslie's avatar

@Love_my_doggie Thank you for coming to my Q! I had read up a little, but really want sure if it was worth me pursuing this avenue. I assume the third party gets paid some sort of fee? How does that work? Is it a flat fee? Is it expensive typically? Can any real estate lawyer or title agent hold the money?

Love_my_doggie's avatar

^^^ Yes, the QI will charge a fee for the service. How much? There’s no set amount; it depends on the company you hire and complexities of your transaction.

No, not just any real estate lawyer can handle this sort of work, and a title agent certainly isn’t qualified. You need to find a Sec. 1031 expert who regularly and frequently does so.

JLeslie's avatar

Ok, thanks. I might come back here if I have another question. Extremely helpful.

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