What are the Basics of a 1031 Property Exchange?
A 1031 Exchange is a mechanism that allows one to defer capital gains taxes otherwise incurred at the sale of real estate. Basic Criteria: 1. Properties: Simplified, both the old property and the new property must be either land, commercial or rental property (in certain cases, vacation and even personal residential property also qualify). You can exchange property for other IRS recognized like-kind property. For example, office buildings could be sold and apartments purchased or an industrial complex sold and raw land purchased. The buying and selling transactions can be separate events involving different parties, just as they would in any arms-length sale and repurchase of property. 2. Money: You cannot touch the proceeds (money). By law, the proceeds from the sale of your current property must be held with a Safe Harbor “Qualified Intermediary or Qualified Escrow Holder” (sometimes also called an “Accommodator” or a “Facilitator”). You cannot place the proceeds in escrow until the
