1031 Exchange Agreement Form For Deed In Illinois

Q: How to change ownership of a property after a 1031 exchange?

In answering the question about changing the title or ownership following a 1031 exchange, the general answer is no. The same investment entity must have ownership of the relinquished property, and take ownership (or the title) of the replacement property, or that exchange could be disallowed by the IRS.

Category:

Real Estate - Taxes

State:

Multi-State

Control #:

US-00333

Format:

Instant download

Description

The 1031 exchange agreement form for deed in Illinois facilitates the exchange of real property while allowing owners to defer capital gains taxes under I.R.C. § 1031. This form outlines the roles of the Owner and Exchangor, detailing the assignment of contract rights, notice requirements, and the handling of escrowed funds. Key features include provisions for identifying and acquiring replacement properties, timelines for completing transactions, and conditions for the disbursement of escrowed funds. It is designed for use by various professionals, including attorneys, partners, owners, associates, paralegals, and legal assistants. These users benefit from the form's structured approach, ensuring compliance with IRS regulations and clarity in the exchange process. Filling and editing instructions emphasize the importance of accurately completing each section, especially regarding notices and timelines. Specific use cases relevant to the target audience include assisting clients with property sales, ensuring adherence to tax regulations, and facilitating smooth transactions during property exchanges.

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FAQ

In answering the question about changing the title – or ownership – following a 1031 exchange, the general answer is “no.” The same investment entity must have ownership of the relinquished property, and take ownership (or the title) of the replacement property, or that exchange could be disallowed by the IRS.

A crucial requirement in a 1031 exchange is that the same taxpayer must sell the relinquished property and acquire the replacement asset. However, there are scenarios where a change of ownership can occur in properties involved in a 1031 exchange without invalidating the exchange.

How to Do a 1031 Exchange Choose a qualified intermediary to coordinate the exchange. Sell your current real estate property. You have 45 days to identify potential replacement properties. You have 180 days to close on a replacement property. File IRS Form 8824.

Depreciation recapture: You can convert your replacement property into a principal residence if your 1031 exchange lets you defer recaptured depreciation tax. This applies regardless of how long you have used the property as your primary residence.

You must file either (1) Form PTAX-203 and any required documents with the deed or trust document or (2) an exemption notation on the original deed or trust document at the County Recorder's office within the county where the property is located.

Your 1031 exchange must be reported by completing Form 8824 and filing it along with your federal income tax return. If you completed more than one exchange, a different form must be completed for each exchange. For line-by-line instructions on how to complete form, download the instructions here.