Frequently Asked Questions
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Farms
Fractional (tenants in common) interest
Leasehold interest, 30-year plus lease
Water rights
Mineral rights
Oil and gas interests
Rental homes
Business properties
The Exchanger relinquishes (sells) qualifying property to a buyer
The proceeds of from the sell of the relinquished property MUST go to a Qualified Intermediary
Qualified Intermediary uses cash to purchase replacement property change by the Exchanger
Exchanger takes ownership of the replacement property.
The replacement property must be of greater or equal value then the relinquished property
All equity must be invested in the replacement property
If there is debt on the relinquished property, there must be equal or greater debt on the replacement property
Yes. The replacement property must have the same or greater debt as the relinquished property, or the exchanger may put in cash to replace some or all of the debt.
Yes. You can still participate in a 1031 exchange.
No. Multiple properties may replace the relinquished properties as long as the one of the three options to identifying properties is followed.
No. The replacement property can be any qualifying real property interest
Within 45 days of the sale of the relinquished property the Exchanger must be identify potential replacement properties
Within 180 days the purchase of the replacement property must be completed
Three properties may be identified, or
Any number of properties may be identified as long as the total fair market value of the properties does not exceed 200% of the fair market value of all of the exchanged properties as of the initial transfer date, or
Any number of replacement properties if the fair market value of the properties actually received as the end of the Exchange is equal to least 95% of the fair market value of the identified properties
Replacement properties include any type of ownership interests that are “like” the relinquished property, including a Delaware Statutory Trust (DST).
What is a Delaware Statutory Trust (DST)?
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Is an investment trust under IRS revenue ruling 2004-86, §301.7701-4(c)
Recognized as a qualified replacement property for purposes of a 1031 exchange
Owners of a DST do not directly own real estate, but own an undivided interest in the trust
Properties owned by a DST may include Tripe-Net, multifamily, industrial, office, etc... an answer to this item.
How will I benefit?
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A successful 1031 exchange will allow the Exchanger to avoid Long-term Capital Gains Tax, Net Investment Income Tax and Depreciation Recapture, as well as State Income Tax. (see example)
Depending on the replacement property, the Exchanger can benefit for diversifying their investment portfolio and potentially acquiring ownership providing passive income
Contact Us
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JCD 1031 Exchange
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Monday - Friday: 9am - 4pm
Saturday and Sunday: Closed
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