Rules for a 1031 Exchange in Bonita Springs Fl
Using a 1031 Exchange to buy and sell real estate is a great way to leverage the tax code to defer capital gains taxes on the sale of real property. If you are buying or selling real estate in Bonita Springs and Estero Florida using a 1031 exchange you will need to meet, at minimum, six primary IRS regulations. Both personally and professionally, Chris has participated with 1031 Exchanges in Bonita Springs and Estero, Florida.
Many of Chris’s real estate clients have sold both residential investment real estate and commercial real estate elsewhere in the United States and purchased replacement properties in the Bonita Springs, Florida area. If you’re thinking of using a 1031 Exchange to fund the purchase of a home or condo in the Bonita Springs or Estero, Florida area, here are a few rules you need to follow:
Real Property Use - Both your old and new properties must qualify as investment or business use. If both types of real estate pass this test, you can exchange nearly any type of real estate.
45 Day Identification Period - You have 45 days from the closing of your sale to list the replacement properties you may want to buy. For example, if you sell a rental property, you have 45 days to list the replacement property you wish to purchase in Bonita Springs, Florida or Estero Florida.
Exchange Period of 180 Days - When you sell your 1031 exchange property you have 180 days to close on the purchase of one or more properties from your 45-day list. So, in theory, you must sell your investment property and choose the replacement properties you’d like to purchase in Bonita Springs then you must close on these properties within 180 days.
Qualified Intermediary - The IRS mandates that you use a QI to prepare the legal documents for your 1031 exchange. The qualified intermediary holds the funds from the sale of the exchange property. Because the QI must be independent, it cannot be your friend, employee, broker, or even your accountant or attorney.
Title For Your Bonita Springs Replacement Property - You must purchase and take title to your new Bonita Springs real estate exactly as you held title to your old property that was sold for the 1031 exchange.
Reinvestment Requirement - To defer all of your capital gain tax, your replacement property in Bonita Springs must be of equal or higher in value than the one you sold. Also, you must reinvest all of the cash proceeds from your sale.
Consult your tax attorney or tax professional prior to engaging in a 1031 Exchange in Estero or Bonita Springs, Florida.