I have been handling Section 1031 tax-deferred exchanges as a Qualified Intermediary for more than 30 years. The following are some of the typical exchange myths I hear repeated almost every day.

I.R.C. Section 1031Tax Deferred-Exchanges allows the taxpayer to sell (relinquish) its investment real estate and defer paying the capital gains taxes (and other taxes) on their profits when they reinvest the proceeds into other investment Replacement Property(ies).

Most of you are aware that the taxpayer/exchanger has 45 days from the day of closing, the day of closing being the first day, to identify possible Replacement Properties when using a 1031 Exchange transaction to defer taxes.

On November 23, 2020, the IRS issued the final regulations defining real property for Section 1031 Exchange purposes. Read on to learn how the IRS significantly expanded the definition of real property.

At least once a week I get asked:   What are the benefits of doing a Section 1031 Exchange?  I normally give the usual answer:  Deferral of Taxes resulting in more funds to spend on possible Replacement Properties.

The good news is that IRS has issued 1031 Exchange Timeline Extensions on some 1031 deadlines. But the notice (Notice 2020 – 23) was not written like the past Disaster Relief Notices, so there may be more clarification to come.

Can the government give an extension to those parties in a section 1031 exchange as a result of the coronavirus?

My primary goal as a Qualified Intermediary (QI) is to ensure that our client engages in a successful 1031 exchange, resulting in deferred capital gains taxes, etc.  1031 Exchanges are not successful every single time. So what happens when the transaction hits a glitch? Many times we find ourselves dealing with a client who wants their money back right now! Sometimes, we just can’t make that happen because there are strict 1031 Exchange disbursement rules.

As the Internal Revenue Code’s Section 1031 becomes more widely known across the country, many investors are discovering the advantages of 1031 Exchange investing.  Yet, some misinformed investors incorrectly believe that a Section 1031 tax-deferred exchange is a tax avoidance device for large corporations.  This lack of understanding undermines one of the tax code’s most effective components

Counting correct 1031 Exchange timelines is critical to successful transactions.

Today we discuss the issue of when the 45-day (for Identifying) and 180-day (last day to close on the purchase of replacement property) timelines in a Section 1031 exchange begin.

So far this year, our office has had four clients who have had their property taken by a governmental agency through eminent domain proceedings.  So, let’s briefly discuss some of the questions they should have asked and the information their financial and/or legal advisors hopefully gave them.