There are several different types of 1031 exchanges of commercial real estate. One such type is known as a simultaneous 1031 exchange. In this article, we explain simultaneous 1031 exchanges of real estate, and discuss when they can be effectively utilized.
What is a Simultaneous 1031 Exchange?
First thing’s first – what exactly is a simultaneous 1031 exchange? In a simultaneous 1031 exchange, the taxpayer sells their relinquished property and immediately acquires their new replacement property simultaneously. This type of exchange is also commonly known as a drop and swap exchange.
Most 1031 exchanges of investment real estate are not set up as simultaneous exchanges. Rather – most 1031 exchanges are delayed exchanges. The reason for this is simple - most taxpayers are unable to synchronize the selling of their relinquished property and the acquisition of their replacement property. In a delayed 1031 exchange you sell your relinquished property, and then acquire your new replacement property at some point during the following 180 day exchange period. Remember, the first 45 days of your exchange period are set aside for identification of the new replacement property. This delayed type of exchange gives taxpayers a lot more flexibility, which is why it’s the preferred method for exchanging investment real estate under section 1031.
Contact CPEC1031, LLC About Your 1031 Exchange
Are you looking to save money on capital gains taxes when selling investment real estate? A 1031 exchange may be a great option for you! Reach out to the commercial real estate professionals at CPEC1031, LLC today to learn more about the process and how we can help facilitate your like-kind exchange. Our 1031 exchange professionals have over twenty years of experience working with clients on all kinds of 1031 exchanges. Let us guide you through the process.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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