A 1031 tax exchange makes it possible to sell your property and defer those capital gains taxes by exchanging one investment property for another. In a 1031 tax exchange, the property you sell and the property you buy must both be like-kind and held for productive use in a trade or business or for investment purposes.
1031 Tax Exchange Process
There are basically three steps to follow in a 1031 tax exchange:

1. Sell your current investment property – You must state that you will be engaging in a 1031 tax exchange in the sales contract before closing. The proceeds from the sale must go through the hands of a qualified intermediary to qualify for a 1031 tax exchange. It’s important to note that in a 1031 tax exchange, all the cash proceeds from the original sale must be reallocated to the replacement property.


2. Identify the replacement property – In a 1031 tax exchange, you have 45 days to identify the new replacement property following the sale of the relinquished property.


3. Purchase the replacement property – You must obtain the replacement property within 180 days of selling the relinquished property in a 1031 tax exchange.
   A 1031 tax exchange specialist at Spectrus Real Estate can help you with all the necessary steps in completing a 1031 tax exchange.
   About Spectrus Real Estate
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