1031 exchanges come with a lot of questions. Here's a recent question we got from a client: "How Soon Can I Purchase a New property After Closing on my 1031 Exchanged Property?" That's our topic for this article.
Replacement Property Closing
You can close on your new replacement properties any time after the old relinquished property is closed and fully funded…but it is best to schedule a little time between the closing. Sometimes the funds from the title company closing the relinquished property take a day or more to clear (if the buyer pays with a check), or they may not wire out on the same day if the closing occurs late in the day after the wire cut-off for the federal reserve. As a result, it's best to not schedule them back to back, unless the same title company is closing both the sale and the purchase.
It’s Murphy's law that "anything that can go wrong will go wrong," and oftentimes there is an unexpected delay on the relinquished property closing that will frustrate the seller of your replacement property if you schedule the purchase close to the day of the relinquished property closing
The best advice is to allow two to three days between the closing to allow a small cushion time for any unforeseen contingencies.
Like-Kind Property Exchanges in Minnesota
The qualified intermediaries at CPEC1031 have over twenty years of experience facilitating real property exchanges for clients in Minnesota and across the country. We can help you through every step of the 1031 exchange process – from selling your relinquished property to closing on your replacement property. Reach out to our intermediaries today and set up a time to chat at our downtown Minneapolis office.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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