1031 Exchanges for the Real Estate Investor

Why Do a 1031 Exchange?
By doing a 1031 Exchange and not paying capital gains tax, the funds that would have gone to the government are now available for you to acquire larger replacement property without taking on additional debt. There is no limit to the number of times you can do an Exchange and continue to rollover the gains - all the while continuing to build your financial empire.

Does My Personal Residence Qualify for a 1031 Exchange?
No. The Taxpayer Relief Act of 1997 provides a tax exemption on the sale of your personal residence. A single person can realize a gain of up to $250,000 and a married couple filing jointly can gain up to $500,000 and not pay capital gains taxes. This property must be your personal residence for at least two years to be eligible for the exemption.
The 1031 Exchange is strictly for investment properties that have been held for a minimum of a year and a day.

How Do I Do a 1031 Exchange? 
The IRS has very strict guidelines which are summarized below.  One of the requirements is that you do not take possession of the proceeds from the sale of your old property; they must be held by a Qualified Intermediary such as the 1031 Exchange Experts.

These are the six primary rules for your exchange to meet stringent IRS regulations.

1.  Real Property Use:  Both your old and new properties must qualify as investment or business use.  If both properties pass this test, you can exchange nearly any type of real estate.

2.  45 Day Identification Period:  You have 45 days from the closing of your sale to list the properties you may want to buy.  There are no exceptions to the deadline.

3.  180 Day Exchange Period:  From the sale closing date, you have 180 days to close on the purchase of one or more properties from the 45-day list.  Again, there are no exceptions to this deadline.

4.  Qualified Intermediary (QI):  The IRS mandates that you use a QI to prepare the legal documents for your exchange.  Because the QI must be independent, it cannot be your friend, employee, broker, or even your accountant or attorney.  The QI also holds your money, so that you do not have access to it.

5.  Proper Title Holding:  You must purchase and take title to your new property exactly as you held title to your old property.

6.  Reinvestment Requirement:  To defer all of your capital gain tax, you must buy a property equal or higher in value than the one you sold.  Also, you must reinvest all of the cash proceeds from your sale.

How Do I Get More Information on 1031 Exchanges?
For more detailed information, you may purchase a very well written book called "Exchanging Up!" by Gary Gorman. This book contains not only a complete copy of IRS section 1031, but a clear explanation of the 1031 process, requirements, eligible properties and rules written in layman's terms.  You may also visit the 1031 Exchange Experts website at http://www.expert1031.com, or contact the firm directly at the address or toll-free number below.

Mr. Gary Gorman is founder of the 1031 Exchange Experts, LLC and author of "Exchanging Up!"

The 1031 Exchange Experts
8101 East Prentice Avenue
Greenwood Village, CO 80111

Phone:  303-694-0204
Toll-Free:  866-694-0204
Fax:  303-694-0205
Website:  http://www.expert1031.com

Information provided by the 1031 Exchange Experts, LLC.
The 1031 Exchange Experts, LLC, are a group of CPA's, attorneys and real estate professionals dedicated to ensuring that your exchange investment is in good hands.  They are the only Qualified Intermediary (QI) in the world that allows their clients to view their funds in a separate, segregated account through their exclusive 1031 Access®--using a secure, password-protected web-portal.  They even wrote the book on 1031 exchanges!  "Exchanging Up!" is a helpful resource that makes complicated exchange concepts simple.  They are an independent QI, and are also dedicated to educating the real estate investing public through books, DVDs, articles, and their website: expert1031.com.  You can call them for free consultation, 24/7, about any exchange questions you may have at 866-694-2024.

 Thank you for your interest in 1031 Exchanges.