1031 Exchange Agreement Form Format In Maryland
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Your settlement agent is required to submit the 1099-S upon the completion of every sale and Form 8824 is your way of notifying the IRS that you did an exchange on that sale and may have deferred your tax liability.
Appraisals are an integral part of the 1031 exchange process as they provide an unbiased estimate of the property's value.
A 1031 exchange enables real estate investors to defer capital gains taxes when reinvesting in like-kind properties. To complete a 1031 exchange, the IRS requires these steps: Sale of Relinquished Property: Only investment properties qualify, and primary residences cannot be used.
A Qualified Intermediary, or QI, is an independent third party to the transaction whose function is to prepare the documents necessary to create the exchange, as well as to act as the independent escrow agent for the exchange funds.
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.
In a three or four party exchange, including the Taxpayer, Buyer of the old property and Seller of the replacement property, then yes, a Qualified Intermediary is required.
Section 1031(f) provides that if a Taxpayer exchanges with a related party then the party who acquired the property in the exchange must hold it for 2 years or the exchange will be disallowed.
Here are examples of properties ineligible for a 1031 exchange: Primary residences: A 1031 exchange is specifically intended for investment or business properties. Personal properties are not eligible. Vacation homes: Vacation homes generally do not qualify if used for personal reasons.