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What Is The First Step Of A 1031 Tax Deferred Exchange?

What Is The First Step Of A 1031 Tax Deferred Exchange?

Confused about the wide world of 1031 Tax Deferred property exchanges? This article from ExchangeSmart.com lays it out for you.

Article posted on Exchange Smart.com

WHAT’S THE FIRST STEP?

Always discuss a §1031 tax deferred exchange with your tax and/or legal advisors.

Call Asset Preservation for a free consultation at any time and definitely before closing on the relinquished property. The following information is needed to begin preparing the exchange documents: A) The name, address and telephone number of the Exchanger; and B) The closer/escrow holder’s name, address, telephone number and file number. We will prepare all necessary exchange documentation and will coordinate with the closer/escrow holder, the Exchanger’s real estate agent/broker and his or her tax and/or legal advisors.
Include language establishing the intent to effect a §1031 tax deferred exchange in the Purchase and Sale Agreement. The following are examples:

SALE OF RELINQUISHED PROPERTY

“Buyer is aware that Seller intends to perform an IRC §1031 tax deferred exchange. Seller requests Buyer’s cooperation in such an exchange and agrees to hold Buyer harmless from any and all claims, liabilities, costs, or delays in time resulting from such an exchange. Buyer agrees to an assignment of this contract to Asset Preservation, Inc. by the Seller.”

PURCHASE OF REPLACEMENT PROPERTY

“Seller is aware that Buyer intends to perform an IRC §1031 tax deferred exchange. Buyer requests Seller’s cooperation in such an exchange, and agrees to hold Seller harmless from any and all claims, liabilities, costs, or delays in time resulting from such an exchange. Seller agrees to an assignment of this contract to Asset Preservation, Inc. by the Buyer.”

Article posted on Exchange Smart.com

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PLEASE NOTE: As of late Aug 2018 there was a proposed law change that would disallow a double deduction for these charitable credits at the federal level for contributions made after Aug 2018. You are still eligible for the AZ state tax credits as the change would only impact your ability to take them as charity donations at the federal level.
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