| 'In this world', said the great Benjamin Franklin, 'nothing is | | | | guidelines and an exacting timetable. Once the original |
| certain but death and taxes'. While modern medicine | | | | property is sold, a list of possible replacements must |
| continues to work on a cure for mortality, 1031 | | | | be supplied to the intermediary with forty-five days, |
| exchanges offer a valuable mechanism against the | | | | while the exchange itself must be completed within |
| foibles of the taxman. Allowing the exchange of one | | | | one hundred and eighty. The title to both properties |
| property for another, this property market trend can | | | | must remain intact throughout the entire process, so |
| help you hold on to money that might otherwise end | | | | this is not the time to dissolve any business |
| up with the IRS. How do you know whether you are | | | | partnerships that might be involved. Any deviance from |
| eligible to take advantage of this great property trend? | | | | these strictures can threaten the entire exchange |
| The first stipulation is that the two properties involved | | | | process. |
| in the swap be in use for 'trade or productive | | | | The properties to be exchanged must also be what is |
| purposes', that is that they are moneymaking concerns | | | | described as 'like-kind', meaning that they are roughly |
| of some kind, such as a rental property or holiday | | | | comparable. This does not mean that the two |
| home. The property intended for swapping must also | | | | properties must echo one another entirely, it simply |
| reside in the US, though it can be located at any point | | | | refers to the fact that the property relinquished and |
| within. | | | | the one to be taken up must both be suitable for use |
| 1031 exchanges necessitate the involvement of what | | | | in a similar business or investment related way. |
| are known as Qualified Intermediaries, who deal with | | | | 1031 exchanges are not for use on residential homes, |
| the paperwork involved in the switch, and assume a | | | | and so, for many people, are of little value. But if you |
| role akin to a property purchaser. The property to be | | | | own a business property and would like to move |
| exchanged is handed over to this intermediary, until the | | | | premises without losing a sum of money to the |
| property owner locates a new property, at which point | | | | taxman, then a 1031 exchange might just be the right |
| the switch can be made. | | | | choice for you. |
| This type of property exchange operates under strict | | | | |