1031 Exchange Explained

Many of our clients purchase a TIC ownership through a 1031 exchange. A 1031 tax-deferred exchange is a method of selling one property and acquiring another without paying capital gains tax on the transaction. In such an exchange, deferral of capital gains tax is indefinite.

In 2002 the IRS endorsed the TIC ownership structure as an acceptable means of deferring capital gains tax through a 1031 exchange. Our properties satisfy all of the requirements for this tax-deferral vehicle.

By consistently maintaining an inventory of excellent properties, Rockwell Debt-Free Properties is always able to help our clients meet the strict timelines imposed to complete an exchange.

The Framework for a Successful 1031 Exchange:

  1. The "1031 exchanger" has an investment property they are selling and enters into an agreement with a Qualified Intermediary to facilitate the exchange.
  2. When the property is sold, proceeds from the sale are wired to the Qualified Intermediary for holding while a replacement property is identified and purchased.
  3. According to IRS rules, the "1031 exchanger" has 45 days after close of escrow on the sold property to identify a suitable replacement property.
  4. The IRS requires the "1031 exchanger" to close on the replacement property within 180 days of the sale of the relinquished property.