1031 Exchange Rules

Section 1031 of the Internal Revenue Code specifies that no gain is recognized if one piece of investment real estate is exchanged for another as long as certain rules are followed. Since no gain is recognized, no capital gains taxes are due. The tax-deferral element of Section 1031 is the primary reason why investors engage in these exchanges. In spite of the obvious appeal of this tax break, investors should consult with their own advisors to determine if a 1031 exchange makes sense in their circumstances.

If an investor does decide to proceed with a 1031 exchange, he or she must be aware of timing rules. The investor will have only 45 days from the date of sale of the relinquished property to find a replacement property. Furthermore, the investor will then have a maximum of 180 days to complete acquisition of the replacement property. In order to comply with IRS safe harbor rules, investors must also use the equivalent of a Qualified Intermediary to handle the funds generated by the sale of one property and the acquisition of another.

At TM 1031 Exchange, we have found that one of the most common reasons why 1031 exchanges fail is because investors can't find desirable replacement property in time. One of our goals is to reduce the number of failed exchanges by assisting investors in identifying suitable replacement properties quickly.

To that end, our senior management brings a wealth of high level real estate experience to bear on the task of finding a large pool of investment grade commercial properties. To learn more about our services or about replacement properties, please call 1-877-4TM-1031, or send an email here info@tm1031exchange.com.