Parker County Today April 2018 - Page 87

1031-Exchange, they already have all my financial and tax information? Or perhaps my attorney?” Great question, but the answer is no. If the seller’s attorney or accountant has provided any legal or account- ing related services (or any service not exchange-related) in the two-year period before the exchange, they are disqualified and may not act as the quali- fied intermediary. Many of us try to save money by handling tax or legal transactions ourselves. Don’t fall for this misconception: “To do a 1031 exchange I just need to file a form with the IRS with my tax return and “roll over” the proceeds into a new invest- ment. As long as I don’t touch the sales proceeds, I can do an exchange any time.” No! A valid exchange requires much more than just reporting the transaction on Form 8824. You want to avoid triggering a taxable event, so it’s impera- tive to manage the process correctly from the beginning. Another commonly asked question, “Is the 1031-Exchange only for large commercial properties?” The short answer is no. Any real or personal property can be exchanged, provided it’s held “for productive use in a trade or business,” or “for invest- ment,” and is exchanged for property of like-kind that will also be held for one of these same purposes. Example – going from one rental house to a larger or different type of investment property, is where the tool may apply. Back to our title – Don’t Leave Money on the Table. If you think it may be time to sell or upgrade that rental house or investment property, make sure you get the best return on your investment. Work with a real estate expert who will get you top-dollar for your current asset and who’s team of Qualified Intermediaries will maximize your investment through limit- ing your tax liabilities. More money for you, less for Uncle Sam; win-win! 85