A 1031exchange or like kind exchange is when you are buying or selling a property and it falls under the guidelines of Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031), the exchange of certain types of property may defer the recognition of capital gains or capital gains losses due upon sale, and consequently defer any capital gains taxes otherwise due.
To qualify for a 1031 exchange, the properties exchanged must be held for productive use in a trade or business or for investment. The properties exchanged must be a like kind exchange of the same nature or character. Real properties generally are of like-kind, regardless of whether the properties are improved or unimproved.
A 1031 exchange has very specific requirements of the transfer of ownership and closings on the like kind exchange properties. They need to be either simultaneous transfers of ownership or a contract to exchange properties in the future.
The seller must identify the property for exchange before closing, identify the replacement property within 45 days of closing, and acquire the replacement property within 180 days of closing. A qualified 1031 exchange intermediary must also be used to facilitate the transaction.
We recommend the Beacon Exchange Company to help you with your 1031 exchange.
Beacon Exchange Company, LLC is a Boston-based Qualified Intermediary for Section 1031 Exchanges. The company was founded on the principles of Integrity, professionalism and service. Safeguarding the validity of your exchange and the security and liquidity of your funds is of paramount importance to us.