1031 tax exchange slides
TRANSCRIPT
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Welcome to
1031 Tax Deferred Exchanges
Helping Investors Take Advantage of Today's Market
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OBJECTIVES
Recognize when 1031 exchange may be a good solution for your client
Know what other professionals should be consulted
Be able to fulfill your role in a 1031 tax deferred exchange .
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Why a “Starker” Exchange?
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Sale and Purchase of Investment Property
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Tax Deferred Exchange
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1031 Exchange Requirements
Relinquished (current) property held for investment
Replacement (new) property must be held for investment
Replacement property must be ID 45 days Replacement property must be settled within
180 days
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Steps in the Exchange Process Analysis of Tax Impact
Real Estate Sales Contract Exchange Documentation Escrow Funds ID of Potential Replacement Properties Replacement Property Contract Replacement Property Documents Transfer of Replacement Property Reporting the Exchange
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Eligibility: “Like-Kind” Property Investment Property
Residential Housing Single family Multi family
Vacant Land Industrial Retail CommercialMust
Be In th
e Unite
d
State
s
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How Many?
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How Many?
Less than200%may
exceedthree
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Eligibility: The Parties
Arm’s Length Transfer
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The Parties
Buyer
$
Intermediary
$
Seller
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Intermediary
Provide Exchange Agreement
Accept assignments of Exchange Contracts
Establish Qualified Escrow Account
Receive 45 Day ID Notice
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Time Frames
To identify replacement property Within 45 days of closing on property being
“exchanged” To close on replacement property
The earlier of: Within 180 days of closing on property being
“exchanged” OR
By due date of tax return
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The Agent’s Role
Managing Expectations
Disclosure
Making the Contract Assignable
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Addenda 1 Wording
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Addenda 2 Wording
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Where Do You Get Your Addendum Language?
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Myths and Misconceptions
Myth # 1
It is required that all types of 1031 exchanges must close
simultaneously.
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Myths and Misconceptions
Myth #2
“Like-kind” means purchasing the same
type of property which was sold.
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Myths and Misconceptions
Myth #3
1031 Exchanges must be limited to 1 exchange
and 1 replacement property.
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Myths and Misconceptions
Myth #4
Exchange property qualifies only if you buy
more expensive replacement property.
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Food For Thought
Maryland Non Resident Seller
Impact of 2008 Housing Bill
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How Did We Do?
• Recognize when 1031 exchange may be a good solution for your client• Know what other professionals should be consulted•Be able to fulfill your role in a 1031 tax deferred exchange .