The Basic Requirements to Qualify for a 1031 Exchange

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The Basic Requirements to Qualify for a 1031
Exchange
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Whether you are considering to go for a 1031
exchange or just need some information about it,
it is better to be equipped with the hands-on
knowledge related to this term. There are a
number of provisions in this exchange that need
to be followed so that you can qualify for it.
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Here are some of the basic requirements explained
so that it becomes easier for you to understand
them. Along with the requirements, you will also
be able to understand the possible problems which
can cause hindrance or delay in the process.
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The Property to be Qualified
It is essential that the property which is to be
used for 1031 exchange should not be in personal
use rather, you must possess it for some kind of
business or trade. Even if you have held on to it
as an investment, it will still qualify for 1031
exchange. The nature of the property and the use
you have put it to until now matter the most in
deciding whether or not you will be able to
exchange it through 1031 and save tax on it.
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Complete Tax Deferral
If you want the exchange to be 100 percent free
from all kinds of taxes, the purchasing price of
the new property must be equal to or should
exceed the price of the existing property. This
is absolutely necessary if you want to completely
evade taxes while carrying out 1031 exchange for
ranch in Texas. If the value of the new property
acquired is less, a certain percentage of tax is
implied depending on the difference between the
values of the two properties.
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No Seller Financing
If you want to complicate things for yourself,
only then go for seller financing. In some cases,
you might be allowed to go for it but this will
be possible only if the financing period is
minimum. However, there are certain cases where
there is no room for it.
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Sale Proceeds Held by Intermediary
As you get the sale proceeds of the renounced
property, it is absolutely necessary that they
must be held by the intermediary during the
exchange process. This helps in keeping the
transactions smooth and there are no issues or
hindrances faced in the exchange as well.
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Legal and Tax Advice
In order to be fully equipped with all the
knowledge pertaining to the 1031 exchange for
ranch in Texas, you must hire an attorney or a
law expert. These people will be able to present
you with the right kind of advice and will help
in achieving your goals smoothly and easily.
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It is to be known that you are only given a time
period of 180 days to find a property for the
exchange following the transfer of the property
to be relinquished. You will not be allowed to
make transactions because that will destroy the
agreement. Be on the safer side and make sure
that you find the perfect property without
needing to withdraw money from the funds.
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This idea is shared by Solid Rock Realty
Advisors, LLC need more detail feel free to visit
our website or give us a call. Website
www.solidrockproperty.com Phone
406-582-1265 Address 2020 Charlotte Street,
Suite 14, Bozeman, Montana