Steve has done 1031 tax deferred exchanges ranging
anywhere from a simple swap of two properties to a complex, multi-leg, multi-party transaction involving reverse exchanges.
and is an EXPERT IN THIS AREA! Contact him for assistance.


What is the difference between a sale and an exchange?
A sale is an exchange of real property for cash. A sale and repurchase of like-kind property following the Internal Revenue Service guidelines is an exchange; a "non-taxable" sale.

For a 1031 TAX DEFERRED EXCHANGE to occur, certain conditions must be met;

1. Property must be "like kind" - which addresses the intended us of the property, as related to business or investment. For example, any of the following could be considered "like-kind" property exchanges. A duplex for a fourplex, bare land for improved property, a rental house for a retail center or an apartment building for an office building. Investors do not have to exchange for exactly the same type of property as relinquished.

2. New property must be identified within 45 days - The new property that you intend to receive in exchange for your existing property must be identified in writing to a "Qualified Intermediary" with 45 days of the first transfer (closing).

3. Transfer (Closing) must take place withiin 180 days from the closing of the existing property. The exchange is completed when the property is purchased by the Qualified Intermediary and
then transferred to the exchangor (you!) through direct deeding.

Boot
"Boot" is a term used to describe "non like kind" property received in an exchange. Cash, notes, personal property, reduction in mortgage (debt relief) are all examples of "boot" and are subject to tax. Most transactions can be restructured to help reduce or eliminate "boot". To avoid "boot", an exchanger must trade across or up in two areas; equity and mortgage.

WHAT ABOUT PERSONAL RESIDENCES? IF you sell (or exchange)your principal residence at a gain, up to $250,000 of the gain may be excluded from income ($500,000 if married filing jointly), provided that you owned and occupied it as a principal residence for at least two years in the five year period ending on the date of sale. There is a two-year waiting period if you claimed another sale withiin the previous two years.

For more on tax-deferred exchanges or selling your principal residence contact Steve today! 623-224-7675 Steve or
email; stephenh@whidbey.net