A 1031 exchange refers to a real estate transaction for investment properties. These exchanges allow the investor to reinvest with a like-kind real estate and defer the capital gains tax associated with the sale of the property.
In a 1031 exchange, an investor has 45 days to identify a list of three like-kind properties. That is, three properties of equal or higher value to the property subject to exchange and 180 days total to close on the new property. The deadlines are set from the close of escrow of the property sold in the exchange.
To begin a 1031 exchange, you first must find a Qualified Intermediary and consult your tax advisor. There are four types of 1031 exchanges. Make sure which one is the right one for you.
The first 1031 exchange I performed with a client was over 20 years ago. My 87-year-old client was living in a retirement home. After I sold her luxury condo, she wanted to do a 1031 exchange.
During my search for a replacement property, the tenant’s cute 3 to 4-year-old daughter was excited to have her picture taken as I was taking pictures from the unit for my client. My daughter, who was taking art classes at the time, without telling me decided to paint this photograph to pay homage to this moment. I have this painting as a memory of my first successful 1031 exchange, and the rewarding work done for my special client.
Right now with slower market pace, I see investors are looking for opportunities.
To learn more about 1031 exchanges, or to begin your 1031 exchange journey, please feel free to reach out to me.
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