1031 Exchange Shopping

This article will give you a few key pointers in what to look for when buying replacement property for a 1031 tax exchange. The first part of this article will talk specifically about the two different timelines you must keep in mind with the second part of this article focusing upon what you can look for in a property.

When you look for replacement property for your 1031 tax exchange, you must make sure to identify the property or properties which you want to buy within 45 days. Within 180 days, you must close on the sale of the property or properties which you had initially identified. You must also have identified a qualified intermediary whom you will use because this company will handle the transaction and this company will file the necessary paperwork regarding which properties you have identified. Those are the specific timelines which you must keep in mind when looking for properties. The next part of this article will focus upon what you can use for a replacement property.

When you are 1031 exchange shopping, you do not need to focus upon finding one property. A 1031 exchange allows you to designate up to three properties as replacement properties. When you are looking for your property or properties, the total fair market value of the three properties cannot exceed two times the fair market value of the property which you initially sold. This is pretty simple in nature as you cannot purchase a $500,000 apartment building to replace a $100,000 rental property which you just sold. When buying your identified properties, you must also make sure to pay at least 95% of the fair market value of your property or properties. These are the three key pointers which should help guide you in your 1031 exchange shopping.

When you do your 1031 exchange shopping, began looking for replace him property long before you sell your old property. The 45 day window may seem a great deal of time but is not very long when you are looking for that perfect property. It can often take a great deal of time to find investment or business property to fit your portfolio and you do not want to have to settle on a mediocre property just to fulfill the 45 day window. Hopefully this article on 1031 exchange shopping is giving you some insight into what to look for in a replacement property.