Solomon C, Lao, CCIM. Your Partner In Commercial Real Estate.
1031 Do's and Don'ts...
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 Intermediaries will not act on backdated or late identifications.
DO keep in mind these three basic rules to qualify for complete tax deferral:
DO NOT plan to sell and invest the proceeds in property you already own. Funds applied toward property already owned purchase "goods and services," not "like-kind" property.
DO attempt to sell before you purchase. Occasionally Exchangers find the ideal replacement property before a buyer is found for the relinquished property. If this situation occurs, a "reverse" exchange (buying before selling) may be necessary. Exchangers should be aware they are considered a more aggressive exchange variation because no clear IRS guidelines exist.
DO NOT dissolve partnerships or change the manner of holding title during the exchange. A change in the Exchanger's legal relationship with the property may jeopardize the exchange.
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