1031 exchanges come in many shapes and sizes, but the most common type is the forward exchange. This article will outline the basics of forward 1031 exchanges in the state of North Dakota.
What is a Forward Exchange?
A forward exchange is the most basic type of 1031 exchange. The process works like this:
- The taxpayer conducting the exchange sells their relinquished property.
- The taxpayer identifies in writing their replacement properties within 45 days.
- By day 180, the taxpayer moves all of their net sales proceeds from the relinquished property into the replacement property.
When done correctly, this allows you to defer 100% of your capital gains taxes on the sale.
Things to Keep in Mind
With any 1031 exchange, there are some key concepts to keep in mind. First and foremost, you need to make sure that your property qualifies for 1031 exchange treatment. Personal property is excluded from 1031 exchanges. Only real estate held for investment purposes can be exchanged under section 1031. Additionally, you need to abide by the 180 day / 45 day exchange deadlines. Finally, you need to make sure that your replacement property is equal to or greater than your relinquished property in debt, equity, and value.
Real Estate Exchanges Under Section 1031
Questions about real estate exchanges under section 1031 of the Internal Revenue Code? You’ve come to the right place! The qualified intermediaries at Commercial Partners Exchange Company have more than two decades of experience facilitating like-kind exchange transactions of all shapes and sizes. We can guide you through the process, prepare all of your 1031 exchange documentation, and answer all of your questions along the way. Contact us today to learn more about the 1031 exchange process and how we can assist. You can find us at any of our satellite offices located across the United States