Looking for a 1031 Exchange in Winter Haven? Here is some information you may find useful:

First off, What is a 1031 Exchange?

A 1031 Exchange is a Tax Deferment method also known as a “Like-Kind” exchange. These transactions are handled by a Qualified Intermediary, who facilities the transaction and handling the funds and reporting to the IRS.  There are strict timelines on a 1031 Exchange that we will go into more detail shortly.

Say you have an investment property, a 1031 Exchange means you can sell that property and then reinvest the proceeds in a “like-kind” property and defer paying any capital gains taxes.

1031 Exchange Winter Haven Timeline:

The Identification Period is when you pick out several (3 properties) that you would like to identify as possibilities. You have 45 Days to do this, and it must be in writing.

The Exchange Period: You have 180 days to close on one of the identified properties to complete the 1031 Exchange.

Some Interesting Facts:

  • If you initiate a 1031 Exchange then decide to cancel, you must wait the 180 days to receive your proceeds.
  • The 45 day identification period does includes weekends and holidays.
  • If you initiate a 1031 Exchange, and fail to identify possible exchange properties, your 1031 fails and your chances to perform a 1031 exchange on that property are lost.
  • The replacement property must involve an equal or greater level of debt than the relinquished property (if not, the investor will have to either pay taxes on the difference or put in additional cash funds to offset the lower level of debt in the replacement property).

A few additional rules:

  • 200% rule: Multiple properties are okay, but may not exceed 200% of value of the relinquished property.
  • 95% rule: Multiple properties are okay, as long as they total at least 95% of the value of the relinquished property.
  • Three-property rule: Up to three properties are okay with no fair market value restrictions.

If you have found yourself in a position to need to do a 1031 exchange, give us a call at 863-333-5053 to discuss your needs! We have all the contacts needed to make your exchange a smooth one.

Why would you want to do a 1031 Exchange?

  •  Defer taxes (up to 40% of the gain)
  •  Diversify or consolidate a real estate portfolio
  • Switch property types
  • Greater purchasing power
  • Build & preserve wealth
  • Expand into other real estate markets nationally
  • Improve cash flow
  • Greater appreciation potential
  • Estate planning for heirs