Restrictions & Considerations
First, determine if the Section 1031 tax-deferred exchange is appropriate for you. We strongly encourage you to consult with your Accountant or Lawyer prior to undertaking an exchange transaction, concerning the tax or legal consequences of Section 1031.
EZ1031 Exchange Inc. will assist you in coordinating the transaction by providing the step-by-step procedure with regards to the following considerations:
The 45-Day Identification Time Limitation
IDENTIFICATION PERIOD: The property you are acquiring needs to be identified within 45 days of the transfer of the first relinquished property. Therefore, Your 45th day is the last day to identify your Replacement property(ies) to EZ1031 EXCHANGE through certified mail.You must identify up to three (3) Replacement Properties.
Property Identification Rules
You may identify as may as three replacement properties, regardless of their total value (the "3-Property Rule"), or you may identify any number of properties provided their aggregate fair market value on the 45th day does not exceed 200% of the aggregate fair market value of all of your relinquished property on the date of its transfer (the "200% Rule"). If you stay within these rules, you do not need to acquire all of the property identified. A third rule applies to situations where there the taxpayer cannot comply with the 3-Property or 200% Rules.
The 180-Day Exchange Period
EXCHANGE PERIOD: The acquisition of your replacement property must be completed by the earlier of 180 days from the transfer of your relinquished property. Therefore, your 180th day is the last day for you to purchase and acquire title to your Replacement property(ies).
Avoiding All Taxable Gain
There are three general considerations that taxpayer should note:
First, replacement property fair market value must be equal or greater than the fair market value of the relinquished property. Second, all of the exchange proceeds from the sale of the relinquished property must be used to acquire the replacement party. Third, the replacement property debt must be equal to or greater than the relinquished property debt so as to avoid taxable gain due to debt relief
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