How Do You Do A 1031 Like Kind Exchange?
A 1031 like-kind exchange is a legally viable way to exchange similar property without realizing a gain for tax purposes. The property is exchanged through a qualified intermediary (QI) within a specific time frame. Since this is an exchange described in the Internal Revenue Code, strict guidelines must be adhered to. Find a Qualified Intermediary (QI). There are large real estate title companies and law firms that can do this type of work. Locate a buyer for your property. The person purchasing your property is not swapping your property for their property. You don’t have to buy their property even though the 1031 is referred to as an exchange. The exchange happens through a QI holding all three properties and then exchanging title to all parties later. Discover a like-kind property. A like-kind property is property that is like-kind according to the Internal Revenue Code (IRC). The IRC explains in 1031 that a male cow can be exchanged for a male cow or real property for real property
