On most cases the property of the tax payer is identified by his name of which it must be indicated. Since he represents the person who buys the property and the holder of the title who will be responsible for filing the tax returns. Another thing with this is that he should take full charge of the property. Another important thing is that single limited company companies can also act as the owner of the property upon agreement by the original property owner.
We also have replacement rule which is also part of 1031 exchange. One thing with the replacement rule is that it is only functional within one hundred and eighty days after closing of the first property. In addition, the property can also be bought and then replaced with the second property upon closing of the first property and the extension of exchangers return.
Apart from that post closing of the first property can be done within a period of 45 days. You can use this period to identify either the accommodator or closing the entity address of the likely replacement of the first property. Another thing is that the owner of the property will still be allowed 45 days for the submission of the property for sale in situation where the replacement property is packed. In some cases the three properties are identified regardless of their value commonly known as three party rule. Compared to two hundred percent rule which only gives chance for selecting of at most three property considering the fact that it should not be past two hundred percent of property sold. To conclude on this rule we have exemption rule which allows for the ninety-five percent of what is identified to be bought if its value of the item sold exceeds two hundred percent.
Another rule is on trading up. The first thing is that the net market value and the equity of the property must be equal to or greater than the replacement property to push forward one hundred percent of the tax on the difference. That difference is important since it determines the tax to be paid. The difference is seen to the sense that additional equity can offset debts and vice versa is not true.
1031 exchange also takes some time to determine important things since they don’t have hold time. Some of the necessities will include determining whether the equipment was acquired immediately before the exchange time and others as well.
In addition, you should also note that you cannot use 1031 exchange for personal use but only for investments or business property. Meaning that you cannot swap your primary residence for another home.