Many people wonder if they can find a patient seller of the replacement property and put the handcuffs on that seller by signing an option agreement or a purchase agreement so you know you’ve got a sure thing to identify and close on. The answer is yes. If you can find a patient seller that will allow you to sign a standard purchase agreement, you can lock them up. Then you can identify that property and quickly close on it. Or you can do a reverse exchange and have your qualified intermediary acquire the property under rev. proc. 2037 in a safe-harbor reverse exchange. You can go out and curate your own success by locking down the replacement property. What you can’t do is exchange into a property that you already own. You can’t buy a property on a contract-for-deed or executory contract that would give you rights of possession and shift equitable title to you prematurely. You’ve got to be careful not to buy the property and take the benefits and burdens of ownership before you’ve disposed of your relinquished property.
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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