1031 Transfers

When doing 1031 transfers, you can identify as many as three replacement properties, regardless of their total value. You can identify more properties if their fair market value does not exceed 200 percent of the value of your relinquished property on the date you transfer it. You do not need to acquire all of the property you identified, and you have 45 days from the sale of your relinquished property to identify the replacement property or properties.

It's a good idea to follow the three property rule. Identify at least two properties, just in case one deal falls through. If for any reason you cannot close on your first choice, you will still have identified another property in time to purchase it. It does not matter where the property is as long as it is in the U.S. You cannot exchange U.S. property for foreign property under the exchange laws.

Transferring Like Kind Property

When searching for replacements, remember that in your transfers, you can identify any type of business or investment property. This could be an office building, a single family house, a duplex, an apartment building, or a hotel, etc. It can also be vacant, undeveloped land, as long as you intend to hold it for income or business use. Any other use, such as a residence, is not a qualified use under the tax code.

The day you sell your property is not too late to perform an exchange. In fact, many people are unaware they are able to defer their taxes this way. If you are about to sell some of your assets and are considering swapping them for other property, consult an exchange specialist to learn more.