What are some do and don items in regard to 1031 Deferred Exchanges?
Do advanced planning for the exchange. Talk to your accountant, attorney, broker, lender, and Qualified Intermediary. Do Not miss your identification and exchange deadlines. Failure to identify within the 45-day Identification Period or failure to acquire Replacement Property within the 180-day exchange period will disqualify the entire exchange. Reputable Qualified Intermediaries will not act on backdated or late identifications. Do keep in mind these three basic rules to qualify for complete tax deferral: • Use all proceeds from the Relinquished Property for purchasing the Replacement Property. • Make sure the debt on the Replacement Property is equal to or greater than the debt on the Relinquished Property. (Exception: A reduction in debt can be offset with additional cash; however, a reduction in equity cannot be offset by increasing debt.) • Receive only “like-kind” Replacement Property. Do Not plan to sell and invest the proceeds in property you already own. Funds applied toward
