The IRS Rules for Exchanges...
You will need to follow six primary rules for your exchange to meet stringent IRS regulations:
1. Real Property Use. Both your old and new properties must qualify as investment or business use. If both properties pass this test, you can exchange almost any type of real estate.
2. 45 Day Identification Period. You have 45 days from the closing date of your sale (relinquished property) to list the properties you may want to buy. There are no exceptions to the deadline.
3. 180 Day Exchange Period. From the closing date of the relinquished property, you have 180 days to close on the purchase of one or more properties from the 45-day list above. Again, there are no exceptions to this deadline.
4. Qualified Intermediary (QI). The IRS mandates that you use a QI to prepare the legal documents for your exchange. Because the QI must be independent, the QI cannot be your friend, employee, employer, broker, or even your accountant or attorney. The QI also holds all of the proceeds from the relinquished property... you do not have access to this money.
5. Proper title holding. You must purchase and take title to your new property exactly as you held title to your old property.
6. Reinvestment Requirement. To defer all of your capital gains tax, you must buy property(s) equal or higher in value than the property you sold. Also, you must reinvest all of the cash proceeds from your sale.
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2271 Wilma Rudolph Blvd Clarksville, TN 37040
Cell: 931-802-1163 Office: 931-648-8500
Toll Free: 888-928-8500
Each Office is Independently Owned and Operated
Broker: Charles Pecka
Broker Licensed in Tennessee and Kentucky
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Information contained herein is deemed reliable but is not guaranteed.
KW Commercial and its' associates recommend all buyers complete a
full investigation to their satisfaction before investing or purchasing real estate.
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