It is possible to revoke your 1031 exchange property identification. Let’s say that you sent in an identification on day 30 of your exchange period and then you had a change of heart. You have the opportunity to revoke that identification. However, if you do so, you have to re-identify in writing new replacement property and you must send that identification to the original party to whom you identified the original property.
You have to identify your replacement property to someone who is not a disqualified person (a family member, your employee, your business partner, etc.) You need to identify to someone who is unbeholden to you.
Construction Improvement Exchanges
More importantly, if you’re doing an improvement exchange you must identify the improvements that don’t yet exist. Let’s say you sold a property for $500,000 and the land is only $100,000. In order to fully defer your taxes in a 1031 exchange you need to continue into a property worth $500,000 or more. So you can have the intermediary purchase the property for $100,000 and during the remainder of your 180 day exchange period, you’ll arrange for the construction of at least $400,000 worth of improvements to the property. That way, when you receive the property it exists as real estate worth at least what your relinquished property was valued at.
Get the Most out of Your 1031 Exchange
Get the most out of your 1031 real estate exchange by working with a skilled qualified intermediary. At CPEC1031, LLC we have been performing qualified intermediary services for more than two decades. Put your trust in us and we can help you maximize the tax-deferral of your 1031 exchange. Contact our 1031 exchange professionals today at our Minneapolis office. We facilitate 1031 exchanges throughout the state of Minnesota and across the United States. We have helped countless taxpayers complete their exchanges – let us help you with yours.
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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