|
Q. |
|
Do I
have to find someone who is willing to swap properties with me? |
|
|
|
| A. |
|
NO!
NO! ... This is THE biggest misconception about
"Exchanging!" |
|
|
Basically,
(while adhering to 1031 regulations), after you have lined up a
buyer for your property, that is usually ALL the involvement you will have with
a buyer. You will then go out (or ask your REALTOR®) to find a property for
you to purchase that meets your needs.Then that's it! A 1031 Exchange may
involve many people and properties! It has nothing to do with "swapping". |
|
|
|
|
|
Note: By the way, you absolutely may do a 1031
Exchange that involves a
"my property for your property" transaction. If the numbers work, go for it! |
|
|
|
| Q. |
|
Do
all properties have to close simultaneously or on the same day? |
|
|
|
| A. |
|
No ..
In fact the majority of exchanges that take place in today's
marketplace are "Delayed" Exchanges. Click Here to re-read
the
"Time Limit" rules. |
|
|
|
| Q. |
|
Can I
do a 1031 Exchange with my "personal residence"? |
|
|
|
| A. |
|
No,
but Uncle Sam now allows you to keep up to $250,000 of gain
"Tax Free" when you sell your "personal residence", and up to $500,000
if you are married ... and you don't have to purchase another home! .... |
|
|
|
|
|
But
the rules are:
1. The home you're selling must be your "Personal
Residence".
2. You must have lived in it for "2 Out Of The Last 5
Years". |
|
|
|
| Q. |
|
What
if my "replacement property" is "under construction"? |
|
|
|
| A. |
|
The
intermediary may retain ownership to the replacement property until the
construction is complete, then complete the transaction. |
|
|
|
| Q. |
|
What
is a "Reverse Exchange"? |
|
|
|
| A. |
|
A "Reverse
Exchange" occurs when you close on your "replacement
property" before closing on the property you are relinquishing. This
type of exchange is completely within the rules. |
|
|
|
| Q. |
|
May I
keep some of the cash and exchange the remainder? |
|
|
|
| A. |
|
Yes,
but remember, any cash (or other "boot") received may be subject to
capital gains tax. |
|
|
|
| Q. |
|
Do I need to hire an
attorney to perform an exchange? |
|
|
|
| A. |
|
No. Involving an
attorney is not a requirement to be in compliance with
the rules of a 1031 Exchange. |
|
|
|
| Q. |
|
May I carry back a
note on a property? |
|
|
|
| A. |
|
Yes. There are
several ways to handle a note in an exchange. Get
professional help before you attempt this, or you may incur a huge
unwanted tax bill ... or worse! |
|
|
|
| Q. |
|
May I
"cancel" the exchange whenever I want? |
|
|
|
| A. |
|
Exchange agreements
allow cancellation under certain circumstances.
Having the right to cancel at "any time" gives investors the right to
receive cash upon request. This may be construed as control of the
cash proceeds. Limits are set to avoid abuse of the process. |
