Got questions? Check out some of the most common ones we hear below, or click on 'Ask CES' to get personalized answers to your specific inquiry.
By utilizing a 1031 exchange, investors can defer capital gains taxes, leverage their equity to invest in higher-value properties, and diversify their portfolios, ultimately leading to increased cash flow, reduced tax liabilities, and enhanced long-term wealth accumulation.
A Qualified Intermediary should be contacted before the property is listed or under contract, not after closing or during escrow.
The 45-day identification period begins the day after the relinquished property closes, not when the property is listed or goes under contract.
A QI is an individual or entity that works with investors to facilitate 1031 exchange and ensure adherence outlined by the IRS Section 1031. The Internal Revenue Service requires that a qualified intermediary facilitate the exchange of properties under Section 1031.
In a 1031 exchange, boot is any non-like-kind property or cash received that doesn't meet tax-free criteria and is subject to capital gains tax. Typically, boot is in the form of cash, an installment note, debt relief, or personal property, and its value is determined by the "fair market value" of the non-like-kind property received in the exchange.
If no replacement property is successfully acquired within the 180-day exchange period, the exchange fails and the proceeds become taxable.
A 1031 exchange can indefinitely defer capital gains taxes if proceeds are reinvested in a similar property within 180 days. Taxes will be due if the replacement property is sold and not reinvested in another 1031 exchange.
A 1031 exchange frees up more capital, allowing you to acquire a replacement property at a much higher value. With higher-value properties, you will be able to build wealth and hit investment goals much more quickly.
Yes, but any amount not reinvested, or any reduction in debt, may result in taxable boot.
Yes. It is important to recognize that tax treatment varies from state to state and it is recommended you review the tax policy for the state as part of the decision-making process.
Yes. No matter how many properties(1 property for 2, or 3 properties for 2) the requirement is the exchange must go across or up in value, equity, and mortgage
No. A 1031 exchange must be structured before closing, and a Qualified Intermediary must be in place prior to the sale.
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