How you handle items of personal property can make or break your 1031 exchange. In this article, we are going to offer a few tips for dealing with incidental personal property in a like-kind exchange transaction.
Dealing with the Purchase Price in the Sale Agreement
During the exchange process, proceeds allocated to personal property are generally not exchange-eligible due to not being real estate. It's crucial to allocate the purchase price between real property and personal property in the relinquished property sale agreement. The portion designated to personal property doesn't go through the Qualified Intermediary.
Clear Representation in the Qualified Exchange Agreement
To ensure no proceeds from relinquished personal property are mistakenly deposited with the Qualified Intermediary, it's advised to have a clear representation in the Qualified Exchange Agreement confirming that all deposited proceeds are from the sale of real property under Section 1031. This helps prevent any confusion over the handling of personal property funds in 1031 exchanges.
Find Out if Your Property Qualifies for 1031 Exchange
Contact a qualified intermediary at CPEC1031, LLC to find out if your property qualifies for 1031 exchange tax deferral. Our team has more than two decades of experience working on like-kind exchanges in Minnesota and across the country. We have all the tools necessary to ensure your exchange is successful. Reach out to our qualified intermediaries today to discuss the details of your next 1031 exchange and start realizing the tax-saving benefits of section 1031 of the Internal Revenue Code.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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