Monday, June 27, 2016 / by Extreme Home Selling Team
Many people are interested in purchasing Florida real estate as an investment prior to retiring. One of the options is to create a 1031 Exchange between Investment Properties. The hitch may come when owners want to convert the end property to a Primary Home. But let’s start at the sale of the first property….
Multi-Family Building Exchanged for TWO Single Family Rental Homes makes a LEGAL 1031 Stark Exchange Transaction!
Property One is valued at $525,000 as a Multi-Family Rental Property in Michigan. The Owner wants to retire in Florida eventually so decides to create a 1031 Exchange.
While researching leads, the Owner cannot find any target properties equaling the $525,000 value that are desirable. Adjusting the search, the Owner selects two properties whose values will equal or exceed this value to utilize the 1031 deferment.
The proceeds from the sale must be deposited with a registered Tax Deferred Exchange Company. Consult your CPA or Real Estate Attorney for a secure source! Always be aware of WHO is holding your money and that they are current on their Bond, Licensure and Insurance. Following the sale, you have 45 days to designate the next 1031 property, and 180 days to close the transaction. Now, this cannot be a Cash Back Transaction. That will trigger a tax event. If the replacement properties are of a lesser value than the sold property, that will trigger a tax event.
There are many criteria to follow so don’t think it’s a simple process. You want to be proactive in your approach to avoid any entanglements with the IRS at a later date. When you decide to live in one of the 1031 properties, research carefully the transfer options to fully protect yourself.
Remember, ALWAYS consult a professional whose counsel you trust.
When YOU are ready to create a Successful Transaction to complement YOUR Retirement/Investment Portfolio,
call on the EXPERTS of the EXTREME HOME SELLING TEAM to put it all together with YOU!
ROBERT “CHIP” DEACON, Broker-Associate
Jeff Kaplan, Customer Care Team
Shari Shepard, Team Admin
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