Videos

Video - 1031 Exchange Holding Period Rules

Many people ask – “is there an objective minimum timeframe that one has to hold a property in order to qualify for a 1031 exchange?” Strangely, the answer is no. The IRS seems to have hidden that piece of information by not articulating a bright line holding period in the code or in the regulations. What they say is that you have to have had an intention to use the property for a qualifying purpose of investment or business purposes. One of the important factors in determining if you had that requisite intent is how long you held it. So holding it for a long period of time can be a good fact.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - How to Control Your Funds in a 1031 Exchange

In a 1031 exchange, you can’t touch the cash proceeds from the sale of the relinquished property. You can’t have actual or constructive receipt of the money. So an intermediary takes possession of the cash proceeds sort of like the synthetic seller. The intermediary becomes the seller of the property and hold onto the proceeds. Your intermediary can hold the proceeds in a separate, segregated bank escrow account to safeguard them. Furthermore, the bank can enter into a qualified escrow deposit agreement that specifies the bank can’t release the funds without the client’s written authorization. So while you can’t have direct control over the funds, you can have an indirect veto power over any disbursements out of the account to protect them from someone absconding with your funds or utilizing them in a way you don’t want.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - The First Step in any 1031 Exchange

The first step in a 1031 exchange is to sing it from the mountain tops in your contracts that you intend to do a 1031 exchange. When you sign the purchase agreement for the sale of your relinquished property you want to include language that affirmatively says you’re doing an exchange. You want to elicit the cooperation of the buyer because there will be a notice that will be given to that purchaser that pertains to your exchange. What you’re going to tell them is “I have assigned my rights in this purchase agreement to the qualified intermediary.” You want to be able to prove that you gave that written notice so you ask the buyer to sign an acknowledgement.

Furthermore, you want to get into contract with your qualified intermediary early in the process. As soon as you’ve got a purchase agreement signed with the buyer it’s time to make arrangements with the intermediary to have them step into your shoes as the seller so they can receive the proceeds and start interacting with the closing agent. There’s a lot of behind the scenes coordination that has to be done between the intermediary and the closing agent to make sure the transaction goes smoothly.

When you sign a purchase agreement for your replacement property, you may also want to include the standard language that states your affirmative desire to do a 1031 exchange and you want to engage with the intermediary as early as possible to make the arrangements behind the scenes. This will set you up for a smooth closing process.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Earnest Money Deposits in a 1031 Exchange

In this 1031 FAQ video, Jeff Peterson talks about earnest money deposits in a 1031 exchange. Watch more 1031 educational videos here.

  • Start Your 1031 Exchange: If you have questions about earnest money deposits in a 1031 exchange, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

Defer the tax. MAXIMIZE your gain.