The Minnesota Exchange Addendum to Contract — Tax Free Exchange Section 1031 is a legal document used in real estate transactions within the state of Minnesota. It specifically pertains to Section 1031 of the Internal Revenue Code, which allows for a tax-free exchange of like-kind properties. This addendum is typically attached to a purchase agreement or contract for the sale of real property. The purpose of this addendum is to outline the specific terms and conditions related to a tax-free exchange under Section 1031. It provides a framework for the parties involved in the transaction to ensure compliance with the necessary regulations and requirements set forth by the Internal Revenue Service (IRS). Key provisions that may be included in the Minnesota Exchange Addendum to Contract — Tax Free Exchange Section 1031 typically include: 1. Identification Period: This section establishes the timeframe within which the seller must identify potential replacement properties. The IRS generally allows a 45-day window for the identification of these properties. 2. Exchange Period: This clause sets the timeline for completing the exchange transaction. The IRS typically requires the transaction to be concluded within 180 days from the transfer of the original property or the due date of the tax return (whichever is earlier). 3. Qualified Intermediary: This section defines the role of a qualified intermediary, who is an independent third party responsible for holding the proceeds from the sale of the original property and facilitating the exchange process. The addendum may specify the requirements for selecting a qualified intermediary and the responsibilities they assume in the transaction. 4. Like-Kind Property: This clause specifies that the replacement property must be of similar nature or character to the property being sold. The addendum may set forth the criteria for determining "like-kind" properties and any restrictions or limitations. It is important to note that there may be different types or variations of the Minnesota Exchange Addendum to Contract — Tax Free Exchange Section 1031 depending on the specific needs and circumstances of the parties involved in the transaction. These variations may include additional provisions or modifications to the standard addendum to account for unique situations or special requirements. For example, there may be separate addenda for different types of property exchanges, such as simultaneous exchanges (where the sale and purchase of properties occur concurrently) or delayed exchanges (where there is a gap in time between the sale and purchase transactions). These variations would be tailored to address the specific rules and regulations applicable to these distinct exchange types. In summary, the Minnesota Exchange Addendum to Contract — Tax Free Exchange Section 1031 is a crucial document in a real estate transaction involving a tax-free exchange under Section 1031. It outlines the terms, timelines, and requirements related to the exchange process, providing a legal framework for the parties involved and ensuring compliance with IRS regulations.