Properties are of like-kind, if they are of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties. However, livestock of different sexes are not like-kind properties. Also, personal property used predominantly in the United States and personal property used predominantly outside the
United States are not like-kind properties.
Within 45 calendar days of the exchange property closing, the Exchangor must provide in writing a legal description of the replacement properties to the Qualified Intermediary. This is called the Identification Period.
Within the earlier of 180 days following the closing of the exchange property or due date including extensions for the Exchangor’s tax return for the taxable year the transfer of the replacement property occurs.
Two rules and One Exception apply:
1) Identify up to three properties without regard to their fair market value. (or)
2) Identify any number of properties as long as their aggregate fair market value of the replacement properties does not exceed 200 percent of the aggregate market value of all the relinquished properties.
Exception:
If the Exchangor identifies more potential replacement properties than allowed under either the three property or 200% rule, the Exchangor must receive replacement property by the end of the exchange period that has a fair market value of at least 95% of the aggregate fair market value of all the identified replacement properties.
The identified properties must be listed in a written document signed by the Exchangor and hand delivered, mailed, faxed, emailed by midnight of the 45th calendar day after the closing of the relinquished property including the legal description, street, statement itemizing construction/improvements of the replacement property
There are a wide array of exchange options available to meet various circumstances. The exchanges available include:
Delayed Exchanges
Reverse Exchanges
Non SafeHarbor Reverse Exchange
Build to Suit/Improvement Exchange
Simultaneous Exchange
Personal Property Exchange
Reverse Exchange:
Reverse Exchange is when the replacement property is closed before the relinquished property.
Title to the replacement property is held until the Exchangor can find a buyer for the relinquished property. An exchange accommodator titleholder is created as a sole purpose entity to hold the title. Once the relinquished property sale closes, the replacement property title is conveyed to the Exchangor.
For more information, other type and categories of the Internal Revenue code Section 1031 Exchange, or consult with a Qualified Intermediary in Destin, Florida and the Beaches of South Walton contact:
