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!
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