Question 1

Can I use a 1031 exchange for a property I occasionally use for personal vacations?

Accepted Answer

Yes you can, so long as you rent the property for more than 14 days per year for the first two years, and use it for personal use fewer than 14 days per year and no more than 10% of nights rented. Got questions? Call us at 916-252-6900 and our 1031 vacation home exchange experts (https://www.my1031pros.com/vacation-home-1031-exchanges)will walk you through the details.

Question 2

What are the IRS rules for using a vacation home in a 1031 exchange?

Accepted Answer

At the time of the 1031 exchange, the primary intent of the investor to use the replacement property for investment purposes is the determining factor as to whether it is for personal use or as an investment. Also, only dwelling units are eligible for these exchanges. For more details, contact us at 916-252-6900 for a free consultation on setting the right strategy for your 1031 vacation home exchange.

Question 3

How long must I hold a property before it qualifies for a 1031 exchange?

Accepted Answer

There is not a specific amount of time that you must hold a property before using it in a 1031 exchange, but the IRS will look at your intent – you must have had the intention to use the property for investment purposes, which could include renting the property at a fair market value.

Question 4

What are the potential tax consequences if my vacation home does not qualify?

Accepted Answer

If your vacation home does not qualify, you may be responsible for paying capital gains taxes on the sale of your relinquished property.

Question 5

Can I use a 1031 vacation home exchange for international properties?

Accepted Answer

We can handle 1031 exchanges of all types, including those of foreign property with like-kind property both at home or abroad. Call us at 916-252-6900 to learn more.

Question 6

How much does a 1031 vacation home exchange cost?

Accepted Answer

Pricing is determined on an individual basis, but at 1031 Pros we offer competitive prices and are willing to match anyone else’s offer.

Question 7

What is a reverse 1031 exchange and how does it differ from a traditional exchange?

Accepted Answer

In a traditional 1031 exchange, you sell a property (known as the relinquished property) and then buy a new property of like kind (known as the replacement property for business use or investment purposes). In a reverse 1031 exchange,(https://www.my1031pros.com/reverse-1031-exchange-services) this order is reversed, enabling you to acquire new property before you have sold your original property.

Question 8

What are the time limits involved in a reverse 1031 exchange?

Accepted Answer

You have 45 days to identify a new replacement property and 180 days to complete the exchange, or you might be liable for capital gains tax.

Question 9

What happens if I can't sell my original property after completing a reverse 1031 exchange?

Accepted Answer

You might be liable for paying capital gains tax when you sell your original property.

Question 10

How do I fund a reverse 1031 exchange?

Accepted Answer

It is important to ensure that you have sufficient funds to acquire the new property, including all potential fees, before you start. In some cases, you can obtain financing for reverse 1031 exchanges, but some lenders are hesitant to enter into this arrangement. We’ll work with you to explore options and mitigate risks.

Question 11

Can I use a reverse 1031 exchange for international properties?

Accepted Answer

We can handle 1031 exchanges of all types, including those of foreign property with like-kind property both at home or abroad. Call us at 916-252-6900 to learn more.

Question 12

How much does a reverse 1031 exchange cost?

Accepted Answer

Pricing is determined on an individual basis, but at 1031 Pros we offer competitive prices and are willing to match anyone else’s offer.

Question 13

What type of property qualifies for a 1031 exchange?

Accepted Answer

Any property held for productive use in a trade or business or for investment can be exchange for like-kind property.(https://www.my1031pros.com/1031-exchange-like-kind-exchange) "Like-kind" refers to the nature of the investment. Any type of real property can be exchanged for another type of real property. For example: A single family rental can be exchanged for a duplex. Raw land can be exchanged for a shopping center or an office space for apartments. Any combination will work. This gives the investor flexibility to change investment strategies to fulfill their portfolio needs.

Question 14

What Does Not Qualify?

Accepted Answer

A personal residence, developed lots, home flipping, partnership interests or property held for resale immediately after acquisition. Second homes may or may not qualify depending upon the use and how it's reported for income tax purposes.

Question 15

What kind of exchanges does 1031 pros handle?

Accepted Answer

We handle all types of exchanges: Delayed Exchanges, Reverse Exchanges and Build to Suit Exchanges. From the simple to the complex, we can handle any type of exchange.

Question 16

Does 1031 Pros handle exchanges in any state?

Accepted Answer

Yes. We can handle exchanges for any property in any of the 50 states.

Question 17

How much notice do I need to do a 1031 Exchange?

Accepted Answer

You can do a 1031 exchange any time before closing on the sale of your investment property. Like we said before, we're fast.

Question 18

How long do I need to own my investment property before I can exchange it for another?

Accepted Answer

There is no set timeline, but to avoid any issues you should at least own it for a minimum of 12 months.

Question 19

What happens if I don't close on my replacement property within 180 days?

Accepted Answer

Then you just pay the capital gain taxes like your would have if you were to sell the property in the first place.

Question 20

Can I sell one property and exchange into multiple properties?

Accepted Answer

Yes, in most cases you can exchange into three other properties.

Question 21

Why should I use a qualified 1031 intermediary to do my exchange?

Accepted Answer

We will prepare all the correct paperwork you will need to file your taxes with. We will also ensure you meet your timelines and any other specifics of the 1031 tax code.

Question 22

What if my Title company is a qualified 1031 intermediary?

Accepted Answer

1031 Pros specializes in exchanges and has the expertise, experience and history to ensure an audit free exchange.

Question 23

What is a reverse exchange?

Accepted Answer

A reverse exchange is when you close on the purchase of the replacement property before you close on the sale of the relinquished property. Many real estate investors will utilize a reverse exchange to acquire a replacement property in a market where there may be competing offers or there is a need to close fast. Because of our vast experience handling these types of exchanges, we offer very competitive rates and are willing to match any competitor pricing.

Question 24

What is an improvement exchange?

Accepted Answer

Also referred to as a construction exchange or build-to-suit exchange, improvement exchanges offer real estate investors nice benefits, which often result in better investment opportunities than properties readily available on the market. The ability to remodel, add capital improvements, or build from the ground up, while using tax-deferred dollars, allows an investor to reinvest in a replacement property that meets their exact investment criteria.

Question 25

What is the Federation of Exchange Accommodators?

Accepted Answer

The Federation of Exchange Accommodators (FEA) is the only national trade association organized to represent professionals who conduct like-kind exchanges under Internal Revenue Code §1031. Members include Qualified Intermediaries (QIs), their primary tax and legal counsel, and affiliated industries (TIC sponsors, banks, real estate brokers, title companies, settlement/escrow agents, etc.). 1031 Pros is a proud member of the FEA.

Question 26

Can I 1031 exchange into a Tenancy in Common or Triple Net Lease Property?

Accepted Answer

Yes, you can exchange into a Tenant In Common (TIC) or Triple Net Lease real estate investments. The biggest rule of thumb is that your name is on the title as an owner with a percentage of ownership. These types of real estate investments offer a great passive income for those who are done with being a landlord and are ready to sit back and collect a monthly check. We do not offer these types of investments at 1031 Pros, but we have some great partners who do. Call us today to learn more.

Question 27

Does my personal residence qualify for a 1031 exchange?

Accepted Answer

No, it does not. Personal residences qualify for different tax benefits under IRS Code Section 121. Section 121 allows a taxpayer to exclude up to $250,000 ($500,000 for certain taxpayers who file a joint return) of the gain from the sale (or exchange) of property owned and used as a principal residence for at least two of the five years before the sale. 1031 Pros does not offer any services or tax advice for personal residences. Please contact our trusted Accounting partners under the "More Tab" for more information on Section 121. Tell them 1031 Pros sent you!

Question 28

Are my funds insured?

Accepted Answer

Each of our exchanges uses a unique, individual, FDIC insured account.  1031 Pros also has additional bonding and insurance, so your funds are always safe and secure.

Question 29

What is considered a "like-kind" property in a 1031 exchange?

Accepted Answer

A like-kind exchange occurs when you want to sell an asset and acquire a similar one, while avoiding capital gains tax. These are heavily monitored by the IRS and require oversight to ensure that no tax penalty is incurred.

Question 30

How long do I have to identify a replacement property?

Accepted Answer

You have 45 days to identify a replacement property for your 1031 exchange.

Question 31

What are the tax implications if I miss the 1031 exchange deadline?

Accepted Answer

If you miss the 180 day deadline, you will be responsible for paying capital gains taxes, as if it were a standard sale of real estate.

Question 32

How do I choose a qualified intermediary for my 1031 exchange?

Accepted Answer

You want your qualified intermediary to be an expert on 1031 exchange regulations and well connected with property managers, real estate companies, and financial experts. You also want a highly responsive intermediary who is always available when you have a question. At 1031 Pros, we are that intermediary.

Question 33

Are there any types of real estate that do not qualify for a 1031 exchange?

Accepted Answer

To qualify, the property must be a business or investment rather than personal property. Your home does not qualify under Section 1031 of the IRS tax code, nor does property held for sale (such as spec houses, building lots, and flips), stocks including those in a Real Estate Investment Trust, bonds, mortgages, and notes.

Question 34

How much does a 1031 exchange cost?

Accepted Answer

Pricing is determined on an individual basis, but at 1031 Pros we offer competitive prices and are willing to match anyone else’s offer.

Question 35

What is a partial 1031 exchange, and how does it work?

Accepted Answer

A partial 1031 exchange (https://www.my1031pros.com/partial-1031-exchanges)lets you sell one investment property and reinvest a portion of the proceeds into another property of like-kind, but keep part of the sale funds as cash. Because you are only reinvesting part of the money, you will be responsible for paying a portion of capital gains taxes on the sale.

Question 36

How do I calculate the tax on the cash received (boot)?

Accepted Answer

Every partial 1031 exchange is unique, and we know how to handle them all. Call us at 916-252-6900 for a free consultation to discuss your situation, and we will help you calculate the taxes on cash received and create a strategy that will make your partial 1031 exchange successful.

Question 37

Can partial 1031 exchanges be used for international properties?

Accepted Answer

We can handle 1031 exchanges of all types, including those of foreign property with like-kind property both at home or abroad. Call us at 916-252-6900 (tel:916-252-6900)to learn more.

Question 38

What are the risks associated with partial 1031 exchanges?

Accepted Answer

In addition to being responsible for paying a portion of capital gains taxes, there are other risks that are familiar to real estate investors – such as property underperformance and legal concerns that arise if you are not compliant with 1031 exchange regulations. When you call us for a free consultation, we will help you review these risks and set a strategy for success.

Question 39

How should I select a qualified intermediary for a partial exchange?

Accepted Answer

At 1031 Pros, we are experts in all 1031 exchanges. Serving all 50 states, we will ensure that you have all of the appropriate documents, are in full compliance with regulations, are set up with a unique FDIC-insured individual account for your exchange, coordinate with your title company, and more. Unlike other qualified intermediaries, we also go the extra mile – providing access to a network of property management and real estate advisors after your exchange, and helping you create long-term investment strategies. And of course, our customer service is the number one reason that investors choose to work with us: we stay one step ahead of the process and respond quickly and accurately to questions.

Question 40

How much does a partial 1031 exchange cost?

Accepted Answer

Pricing is determined on an individual basis, but at 1031 Pros we offer competitive prices and are willing to match anyone else’s offer.

Question 41

Can I use a 1031 exchange for building improvements?

Accepted Answer

You absolutely can, putting funds from the sale of your relinquished property toward improvements on your replacement property with a full deferral of capital gains taxes, so long as you meet the deadlines and IRS regulations associated with 1031 exchanges.

Question 42

What is a 1031 improvement exchange, and who can benefit from it?

Accepted Answer

A 1031 improvement exchange (https://www.my1031pros.com/improvement-1031-exchanges)lets you use pre-tax dollars from the sale of your relinquished property to increase the property value of your new, replacement property through enhancements to existing structures. All while deferring capital gains tax.

Question 43

What are the critical timelines I need to be aware of?

Accepted Answer

Your replacement property must be identified within 45 days of selling your relinquished property, and the entire transaction – including all improvements specified in the exchange – must be completed within 180 days.

Question 44

Can I handle the construction management myself?

Accepted Answer

Acting as project manager for the construction, you will send invoices to 1031 Pros, as your EAT, to be paid directly to your vendors. We will work closely with you to ensure that all funds are handled correctly.

Question 45

What happens if the improvements are not completed on time?

Accepted Answer

If the improvements on the replacement property are not completed within the 180 timeline, you will be liable for capital gains taxes on the sale of your relinquished property. We are experts in all aspects of 1031 exchanges; call us at 916-252-6900 to discuss your plans and we will help make sure that your exchange goes smoothly.

Question 46

How do I choose a qualified intermediary for an improvement exchange?

Accepted Answer

You want to find a qualified intermediary with experience in 1031 improvement exchanges. They will ensure that you have all of the appropriate documents, are in full compliance with regulations, are set up with a unique FDIC-insured individual account for your exchange, coordinate with your title company, and more. At 1031 Pros, we do all of this in all 50 states in the U.S., as well as bringing you access to a network of property management and real estate advisors after your exchange, and helping you create long-term investment strategies. When selecting a qualified intermediary, be sure to read customer reviews and testimonials and choose one that answers the phone when you call, no matter what time, and responds to emails within 24 hours. 1031 Pros is that qualified intermediary, and we are ready to help you with your exchange.

Question 47

How much does a 1031 improvement exchange cost?

Accepted Answer

Pricing is determined on an individual basis, but at 1031 Pros we offer competitive prices and are willing to match anyone else’s offer.

Question 48

What are 1031 exchange services and how can they benefit me?

Accepted Answer

Unlike traditional real estate transactions, where you sell one business or investment property and buy another – and pay heavy capital gains taxes along the way – 1031 exchanges l(https://www.my1031pros.com/1031-exchange-services)et you defer capital gains taxes. When choosing what types of properties to include in your real estate portfolio, working with a Qualified Intermediary to ensure compliance with tax regulations and set a long-term investment strategy will help you grow your portfolio faster.

Question 49

Are there different types of 1031 exchange services?

Accepted Answer

There are, based on when you sell your relinquished property and acquire a replacement property. We handle all types of exchanges, including in-kind, reverse, partial, and new construction exchanges.

Question 50

How do I choose the right service provider for a 1031 exchange?

Accepted Answer

You want a Qualified Intermediary with extensive experience handling all types of 1031 exchanges, who is up on the latest regulations, who has a good reputation, and provides excellent and quick customer service. At 1031 Pros, we check all of these boxes and more.

Question 51

What are the common mistakes in 1031 exchanges and how can they be avoided?

Question 52

How long does a 1031 exchange take from start to finish?

Question 53

How much does a 1031 exchange cost?

Question 54

Can 1031 exchange services help with property outside the U.S.?

Question 55

What should I prepare before contacting a 1031 exchange service provider?

Question 56

Can I use proceeds to buy in another state?

Question 57

How does a 1031 exchange apply to new construction projects?

Question 58

What are the time constraints in new construction 1031 exchanges?

Question 59

Can I manage the construction process myself in a 1031 exchange?

Question 60

What are the risks involved in new construction 1031 exchanges?

Question 61

How do I select a qualified intermediary for a construction-focused 1031 exchange?

Question 62

How much does a new construction 1031 exchange cost?

Question 63

What exactly does a qualified intermediary do in a 1031 exchange?

Question 64

How do I choose a qualified intermediary for my exchange?

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