Title: 1031 Exchange for Dummies - Your Definitive Guide to Rules, Tax Deferral, Timelines
Headings: 1031 Exchange for Dummies – Your Definitive Guide to Rules, Tax Deferral, Timelines
1031 Exchange for Dummies – Your Definitive Guide to Rules, Tax Deferral, Timelines
Table of Contents
What is a 1031 Exchange?
Why do a 1031 Exchange? Is the 1031 Exchange For Dummies or For Experienced Real Estate Investors?
4 Types of 1031 Exchanges
Simultaneous 1031 Exchange
Delayed 1031 Exchange
Reverse 1031 Exchange
Construction 1031 Exchange
1031 Exchange Rules – The 7 You Should Know
Rule #1: Replacement Property Must Be “Like-Kind”
Rule #2: For Productive Use in a Trade or Business
Rule #3: New Property Must Be Equal or Higher in Value
Rule #4: Cannot Receive “Boot”
Rule #5: Same Exchangor
Rule #6: The 45-Day Identification Period
Rule #7: The 180-Day Purchase Period
1031 Exchange Rules – Conclusion
Choosing the Right Qualified Intermediary
Make Sure They Possess the Right Amount of Experience
They Use a Segregated Qualified Escrow Account
Guarantee Your Fund Security
Provides Transaction Transparency
Offers Appropriate Insurance
Replacement Property Options For Your 1031 Exchange?
What Qualifies as a Like-Kind Replacement Property?
What Doesn’t Qualify As a Replacement Property?
Why DST’s Are a Good Option

Content: Investors use the construction exchange as it offers more flexibility than a typical delayed or reverse exchange. You can buy replacement properties that are the same value or higher without worrying about boot. The 1031 exchange for dummies is a great cost savings tool! Also, you can buy low priced properties or vacant land and build a building on it. You do need to meet three main requirements or rules to do an improvement exchange. These are: The equity from your previous property must be spent on completed improvements or the down payment by day 180
You must receive “substantially the same property” on day 180 as what you identified by the 45th day. This means you cannot submit blueprints to add a pool to an apartment complex, and then build a gym instead
The replacement property has to be equal or greater value when you take deed again. The improvements cannot be “ordered materials” they have to be installed onto the property
There are many scenarios where a construction exchange makes sense, but they are complex. We highly recommend consulting an accountant or lawyer to help plan the exchange.