1031 Exchange

1031 Exchange

A 1031 exchange is a substitute of one investment property for another that allows capital gains taxes to be deferred. Named from the Internal Revenue Service (IRS) code Section 1031, this method is commonly used as a means to diversify a portfolio by participating in mineral rights & royalties.

Identify the next property

After the first property closing, the taxpayer/exchanger has 45 days to provide the closing entity/accomodator with the addresses of potential replacement properties. 

Purchase Replacement Property within 180 days

Within 180 days following the closing of the first property, the new property must be purchased.

Same Taxpayer

The tax return and name appearing on the title of the properties must be the same. A single member limited liability company (smllc) is considered a pass through to the member, consequently, the smllc may sell and the member may purchase in their individual name.