I.R.S. Code Section 1031 Tax Deferred Exchange 

A 1031 Tax Deferred exchange permits taxpayers to reinvest proceeds from the sale of property held for investment or business purposes into another investment or business property, and defer capital gains tax that would otherwise be due on the initial sale. 

1031 allow deferral of: Capital Gains Taxes, Depreciation Recapture, State Taxes (where Applicable) 

Benefits of 1031: Leverage, Diversification, Consolidation, Cash Flow, Management Relief, Increase Depreciation, Estate Planning 

Procedure to do a 1031 Tax Deferred Exchange  Step I Sale of Relinquished Property:  You need an experienced Realtor and a Qualified Intermediary. As a real estate Broker I can list and sell the relinquished property, help with the selection and purchase of the new properties, select the Intermediary and help with the documentation. The intermediary will prepare the required Exchange Agreement and some of the supplemental documentation as listed below: 

Written Exchange Agreement 

Assignment of Sales Contract 

(The relinquished property must have been held for a reasonable time as evidence the exchanger is an investor not a dealer in realestate) 

Step II Identification of Replacement Property: The exchanger must identify the property to be purchased within 45 days following the sale of the Relinquished Property.

Three Property Rule: Pick three properties regardless of their valu

or use the 200% Rule: Any number of properties, as long as the aggregate market value (Fair Market Value) at the end of the exchange period does not exceed 200% of the FMV of the property disposed of by the Exchanger, as of the date of transfer.

or use the 95% Rule: Any number of properties with any aggregate FMV, but the Exchanger must then actually acquire 95% of all the properties identified by the end of the exchange period. 

Step III Acquisition of Replacement Property: Have a Realtor help purchase the replacement property.

180 Day Replacement Rule: Exchanger must obtain the Replacement Property within 180 days following the sale of the relinquished property. 

Napkin Rule: All cash proceeds from the sale of the Relinquished Property must be reinvested in the Replacement Property or pay the tax on the difference.

The purchase price of the Replacement Property must be as least as much as the sale price of the Relinquished Property or pay tax on the difference.

The purchaser of the Replacement Property must be the same as the seller of the Relinquished Property or be a "Disregarded Entity"

For safe harbor protection, exchange funds should be held by a Qualified Intermediary. 

As your Realtor I can help select a qualified Intermediary, I know what to look for in terms of Security, Service, Experience and Costs.  Further, I can recommend a number of Qualified Intermediary's that I am familiar with and can help with the transaction as your experienced Realtor. Telephone me at 904-608-5681 or e-mail: tomsells@bellsouth.net  if you have additional questions or would like to do a 1031 Tax Deferred Exchange. 

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