Brown: GlobeSt.com: Passco is known for its expertise in providing 1031 tax differed exchange solutions. Can you explain what brokers need to know about this process and how a 1031 exchange can benefit a seller? Belden Brown:
  • Acquire only “like-kind” replacement property.
  • All proceeds from the relinquished property must be used for purchasing the replacement property.
  • Make sure the debt on the replacement is equal to or greater than the debt on the relinquished property. (Exception: A reduction in debt can be offset with adding additional cash; however, a reduction in equity cannot be offset by increasing debt.)
  • IRS regulation requires a QI (Qualified Intermediary) to be used to properly complete an exchange.
  • Do not dissolve a partnership or change the manner of holding title during the exchange. The title must remain the same during the exchange process.
  • The seller has 45 calendar days from the close of their real estate to identify the replacement property (ies), known as the “Identification Period” and then another 135 days to close on the replacement property (ies) identified.
GlobeSt.com: Can a seller only exchange assets that are within the same product type and can the exchange be split among several different investments? Brown: GlobeSt.com: How is the debt and equity structured in a 1031 exchange? Brown: GlobeSt.com: How would you suggest a broker structure the sale of a property? Brown: Brown: GlobeSt.com: Passco is known for its expertise in providing 1031 tax differed exchange solutions. Can you explain what brokers need to know about this process and how a 1031 exchange can benefit a seller? Belden Brown:
  • Acquire only “like-kind” replacement property.
  • All proceeds from the relinquished property must be used for purchasing the replacement property.
  • Make sure the debt on the replacement is equal to or greater than the debt on the relinquished property. (Exception: A reduction in debt can be offset with adding additional cash; however, a reduction in equity cannot be offset by increasing debt.)
  • IRS regulation requires a QI (Qualified Intermediary) to be used to properly complete an exchange.
  • Do not dissolve a partnership or change the manner of holding title during the exchange. The title must remain the same during the exchange process.
  • The seller has 45 calendar days from the close of their real estate to identify the replacement property (ies), known as the “Identification Period” and then another 135 days to close on the replacement property (ies) identified.
GlobeSt.com: Can a seller only exchange assets that are within the same product type and can the exchange be split among several different investments? Brown: GlobeSt.com: How is the debt and equity structured in a 1031 exchange? Brown: GlobeSt.com: How would you suggest a broker structure the sale of a property? Brown:
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