Unlike a standard 1031 exchange, where a property owner sells their property and then acquires a replacement property, a reverse 1031 exchange involves acquiring the replacement property before selling the relinquished property. Here are the general steps involved in a reverse 1031 exchange: Engage a Qualified Intermediary (QI): Just like in a regular 1031 exchange, it’s […]
In a 1031 Exchange, a taxpayer can defer the capital gains tax on the sale of certain property if the proceeds are reinvested in a “like-kind” property. For 1031 exchanges, the definition of like-kind is relatively broad. In the context of real estate, like-kind generally refers to the nature or character of the property rather […]
The identification rules refer to the guidelines that investors must adhere to when identifying replacement properties in a 1031 exchange. There are two key identification rules: Three-Property Rule: Under this rule, the exchanger can identify up to three potential replacement properties. Regardless of their fair market value, you can identify three properties as potential replacements. 200% […]
An UPREIT, or Umbrella Partnership Real Estate Investment Trust, is a real estate investment structure that allows property owners to contribute their real estate assets to a partnership in exchange for operating units in a real estate investment trust (REIT) that owns the partnership. UPREITs are commonly used in the United States as a tax-efficient […]
“Boot” refers to any portion of a 1031 exchange that does not meet the like-kind replacement property criteria. Most commonly this is in the form of “cash boot” and “mortgage/debt boot.” Cash boot occurs when an investor has uninvested proceeds from the sale of a replacement property. If they intend to do a 1031 exchange but do […]
Learn about the role of a Qualified Intermediary (QI) in a 1031 exchange. Discover how they facilitate the process and ensure IRS requirements are met.
