FREQUENTLY ASKED QUESTIONS:
1. What are the timelines for completing a 1031 exchange? From the date of closing on relinquished property, the taxpayer has 45 days to identify a replacement property or combination of properties. Closing on the replacement(s) must occur within 180 days.

2. What type of property qualifies for a 1031 exchange? Any type of real property held for investment can be used in a 1031 exchange, including: vacant land, residential rental property, and commercial property. Personal residences, vacation or second homes, stocks, bonds, and properties purchased for immediate resale do not qualify for a tax-deferred exchange.

3. What amount should be re-invested into replacement property to defer all taxes? Replacement property and its debt amount should be of equal or greater value than relinquished property and its debt amount to defer all taxes.

4. When should an exchange be started? Anytime before the closing on relinquished property has been completed. It is advisable to include language (approved by an attorney) which shows intent to exchange properties in purchase and sale documents. Click here for sample language.

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