1031 Exchange Agreement Form For Deed In Middlesex
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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.
If during the current tax year you transferred property to another party in a like-kind exchange, you must file Form 8824 with your tax return for that year. Also file Form 8824 for the 2 years following the year of a related party exchange. See Line 7, later, for details. Section 1031 regulations.
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.
Key Steps in the 1031 Exchange Process Determine if a 1031 Exchange is Right for You. Develop a Tax-Deferred Transition Strategy. Inform Your Advisors & Attorney About your 1031 Exchange. Enter into a Contract to Sell Your Existing Investment Property. Select a Qualified Intermediary and Open an Exchange.
In essence, a 1031 exchange (also called a like-kind exchange or Starker exchange) allows real estate investors to trade on investment property for another of similar type, avoiding the recognition of capital gains at the time of the swap.
What Property Types Qualify for a California 1031 Exchange? 1031 exchanges can only be used when selling business or investment properties, so your primary residence isn't eligible (fortunately, the tax code provides a separate exemption for selling your home).
Vacant land, also known as undeveloped, bare or raw land, in fact does qualify for 1031 treatment, as long as the land is being held for business use or investment purposes. Same applies to agricultural land like farms, ranches, raw land, and mixed-use property comprised of land with a primary residence.
The property must be a business or investment property, which means that it can't be personal property. Your home won't qualify for a 1031 exchange.
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.