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1031 INFORMATION - EXCHANGE ISSUES

 

1031 Exchange Identification Period: There is a strict 45-day rule for identifying your exchange properties. Within 45 days of selling the original property you must identify suitable replacement properties. This 45-day rule is very strict and is not extended should the 45th day fall on a weekend or legal holiday.

Exchange Period: The replacement property must be received by the taxpayer within the "exchange period," which ends a) 180 days after the date on which the taxpayer transfers the relinquished property, or b) on the due date for the taxpayer tax return for the taxable year in which the transfer of the relinquished property occurs, whichever comes first. This 180-day rule is very strict and is not extended if the 180th day falls on a weekend or legal holiday.

Failing to close on a 1031 Exchange: If you do not close on your Exchange property, you will have to pay capital gains taxes. By identifying a DST property, you can reduce your potential tax risk, and avoid a failed closing. In the event that you fail to close on other identified properties, you are able to move all your proceeds into the DST property you identified.

DST Investment Amounts: While the typical investment in whole commercial buildings begins at $1 million, through DST ownership, the average person is able to enjoy ownership in a commercial property with a minimum investment. Revenue Procedure 2002-22 issued by the IRS allows up to 35 DST owners in any one property. Minimum purchase requirements can range as low as $50,000 equity. The requirements are structured to meet the 35-owner limitation. These properties are able to attract tenants with greater financial strength and stability than is possible for an individual landlord while offering reliable income and growth potential.

1031 INFORMATION


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