Welcome to

1031 Tax Deferred Exchanges

Helping Investors Take Advantage of Today's Market 

OBJECTIVES

Recognize when 1031 exchange may be a good solution for your client

Know what other professionals should be consulted

Be able to fulfill your role in a 1031 tax deferred exchange .

Why a “Starker” Exchange?

Sale and Purchase of Investment Property

Tax Deferred Exchange

1031 Exchange Requirements

Relinquished (current) property held for investment

Replacement (new) property must be held for investment

Replacement property must be ID 45 days Replacement property must be settled within

180 days

Steps in the Exchange Process Analysis of Tax Impact

Real Estate Sales Contract Exchange Documentation Escrow Funds ID of Potential Replacement Properties Replacement Property Contract Replacement Property Documents Transfer of Replacement Property Reporting the Exchange

Eligibility: “Like-Kind” Property Investment Property

Residential Housing Single family Multi family

Vacant Land Industrial Retail CommercialMust

Be In th

e Unite

d

State

s

How Many?

How Many?

Less than200%may

exceedthree

Eligibility: The Parties

Arm’s Length Transfer

The Parties

Buyer

$

Intermediary

$

Seller

Intermediary

Provide Exchange Agreement

Accept assignments of Exchange Contracts

Establish Qualified Escrow Account

Receive 45 Day ID Notice

Time Frames

To identify replacement property Within 45 days of closing on property being

“exchanged” To close on replacement property

The earlier of: Within 180 days of closing on property being

“exchanged” OR

By due date of tax return

The Agent’s Role

Managing Expectations

Disclosure

Making the Contract Assignable

Addenda 1 Wording

Addenda 2 Wording

Where Do You Get Your Addendum Language?

Myths and Misconceptions

Myth # 1

It is required that all types of 1031 exchanges must close

simultaneously.

Myths and Misconceptions

Myth #2

“Like-kind” means purchasing the same

type of property which was sold.

Myths and Misconceptions

Myth #3

1031 Exchanges must be limited to 1 exchange

and 1 replacement property.

Myths and Misconceptions

Myth #4

Exchange property qualifies only if you buy

more expensive replacement property.

Food For Thought

Maryland Non Resident Seller

Impact of 2008 Housing Bill

How Did We Do?

• Recognize when 1031 exchange may be a good solution for your client• Know what other professionals should be consulted•Be able to fulfill your role in a 1031 tax deferred exchange .