Many homeowners have heard of a "1031 Exchange," but few understand the basics of what an exchange actually entails. Today I want to cover just a few of the basics of the process, as it can be an invaluable method of homeownership for investment homeowners.
What is a 1031 Exchange?
1. The total purchase price of the replacement "like kind" property must be equal to, or greater than the total net sales price of the relinquished, real estate, property.
2. All the equity received from the sale, of the relinquished real estate property, must be used to acquire the replacement, "like kind" property.
1031 Timelines and Rules
Identification period – the seller has exactly 45 days from the sale of the original property to identify other replacement property(s) that he proposes or wishes to buy.
Exchange period – the period during which the seller of the relinquished property must receive the replacement property. This period ends exactly 180 days after the date on which the person transfers the property relinquished or the due date for the person's tax return for that taxable year in which the transfer of the relinquished property has occurred, whichever situation is earlier.
If you want to learn more about strategies for buying and selling investment properties, or are interested in Huntsville AL real estate, please call me at 256-508-0211 or visit MoveToHuntsville.com. To get started searching for Huntsville AL real estate, please use my complimentary MLS search.