FACTS: The Exchanger, who lives in Idaho, has closed on its Nevada Relinquished Property ( an investment rental home valued at $350,000) on August 1, 2017
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FACTS: The Exchanger, who lives in Idaho, has closed on its Nevada Relinquished Property ( an investment rental home valued at $350,000) on August 1, 2017
FACTS–A very bright client of ours purchased two different properties a number of years ago. These two properties were in a developing area of Miami-Dade County.
The case law on this type of 1031 Exchange transaction shows that the IRS may consider the exchanger to be a “Dealer” rather than an investor which will disqualify the transaction as a 1031 exchange relinquished property sale. The case law varies in outcomes, but generally, this is not a safe way to proceed.
The Exchanger has only 45 days from the day of closing on its relinquished property to identify possible replacement property. WARNING: Section 1031 and the IRS regulations thereunder have strict requirements for the identification of replacement property.
First, it is not only the capital gains tax that the taxpayer will be deferring payment on, when transacting a Section 1031 exchange, it’s also the additional depreciation recapture tax on the relinquished property, as well as any State income taxes if any.
Pretend my last name is McDonald. Further, pretend that I am a farmer. AND on my farm–E- I, E- I – O, –ENOUGH of the nursery rhyme–but if I had a farm and I lived in the farmhouse but farmed the surrounding land, I would have a mixed-use property. The farmhouse would be my personal residence and the surrounding farmland would be a property that I used in my trade or business (in this case, farming) or was being held as an investment and could be used in a mixed-use 1031 Exchange transaction.
THE PROBLEM: On a Section 1031 Tax Deferred Exchange, the taxpayer has 45 days from the closing of the sale of the relinquished property, to identify possible replacement properties.
THE PROBLEM: For a Section 1031 Exchange, where the relinquished property was transferred between October 19, 2016, and December 31, 2016, you might not have a full 180 days to close on your replacement property.
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 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.
Disregarded entity is a term that comes up because I frequently get asked whether the taxpayer/exchanger can take title to their Replacement Property in a different name or different legal entity than the name that was held on their Relinquished (sale) transaction.
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.
There are a number of “exchange expenses” that will reduce the realized gain and recognized gain on a Section 1031 Exchange.
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.
What happens if two or more taxpayers own property together, as tenants in common, and decide that they want to go their separate ways?
What happens to the 1031 Exchange validity when a transactional mistake causes a violation of IRS 1031 Exchange rules?
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