RULES FOR 1031 EXCHANGE IN A NUTSHELL
True For Both Types Of 1031 Exchanges (Forward and Reverse)
- Old and new properties must be held for investments or for business.
- The exchanger must have a written exchange agreement with a Qualified Intermediary (QI) before closing.
- All real estate is “like-kind” to all other real estate.
- New property must be equal or up in fair market value (FMV) and in equity.
- Any cash taken out is taxable.
- Person on title of old must be person on title to new.
- OK to exchange multiple old properties for one new property or vice versa. Fractional interest is OK.
- Owner financing handled outside of exchange.
- “Related Party” transactions have additional requirements.
- Basis of old carried forward into new, with adjustments.
In a Forward exchange, the Exchanger must:
- Not receive funds from sale.
- ID new property, in writing, within 45 days.
- Close on new property within 180 days.
In a Reverse exchange, Exchanger must:
- Not hold title to both properties simultaneously.
- “Park” either the old or new property with QI.
- QI cannot hold title to either property for more than 180 days.
- ID old property within 45 days if new property is “parked.”
- Provide funding to purchase new property.
1031 Tax Calculator
|1. Calculate Net Adjusted Basis:|
|State Capital Gain Rate:||%|
|Original Purchase Price||$|
|= NET ADJUSTED BASIS||=$|
|2. Calculate Capital Gain Sales Price of Property:|
|minus Net Adjusted Basis||-$|
|minus Costs of Sale||-$|
|= Capital Gain||=$|
|3. Calculate Capital Gain Tax Due:|
|Recaptured Depreciation (25%)
(5 taxed at 25%)
|plus Federal Capital Gain Tax
(Remainder:$-100 - $5 taxed at 15%)
|plus State Capital Gain Rate:||+$|
|= TOTAL ESTIMATE TAXES DUE||=$|
|Simple Exchange Fee at 1031x.com||-$|
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