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1031 Exchange FAQ’s

What qualifies as a “like-kind” property? All real property is considered “like-kind” and can be exchanged for all other real property. What are ineligible properties for a 1031 Exchange? Stock in trade or property held primarily for sale Stocks, bonds, or notes Securities or evidence of indebtedness Timber rights Personal Residence Time-share Vacation home When is gain or loss recognized? The gain is recognized in a completed 1031 Exchange, when the owner disposes of the Replacement Property in fully taxable transaction. If the owner continues to execute 1031 Exchanges, the gain will never be recognized. What is the role of the Qualified Intermediary? The role of the Qualified Intermediary, or ‘Exchange Accommodator’, holds the funds of the relinquished property and monitors critical dates to meet the 1031 Exchange requirements. What are the time limitations under the IRC Code? There are two critical timelines that an owner must meet in order to meet the 1031 Exchange requirements. An owner has 45 days from the date of the sale of the relinquished property to identify the replacement property. 180 days from the transfer of the relinquished property, the title to the replacement property must be acquired. 1031 TIC FAQ’s What is Tenants-in-Common (Tenants In Common)? A Tenants In Common is a form of real estate asset ownership in which two or more persons have an undivided, fractional interest in the asset, where ownership shares are not required to be equal, and where ownership interests can be inherited. Each co-owner receives an individual deed at closing for his or her undivided percentage interest in the entire property. Through Tenants In Common ownership, the average person is able to enjoy ownership in an institutional-type property with a minimum investment. What purchase amounts are required for Tenants In Common? Revenue Procedure 2002-22 issued by the IRS allows up to 35 Tenants In Common owners in any one property. Minimum purchase requirements are structured to meet this limitation and can range as low as $150,000 equity. What if a co-owner wishes to sell their Tenants In Common interest? A 75% vote by the Tenants In Common owners will typically be sufficient to initiate the impasse resolution procedure. This procedure allows the Tenants In Common owners with 75% or more of the property to make an offer to buyout the co-owner with 25% or less of the property. The dissenting Tenants In Common owners can either: (1) accept this offer, (2) buy out the 75% Tenants In Common owners at the same price per percentage ownership, or (3) change their dissenting vote to a consenting vote. What happens to a Tenants In Common ownership if a co-owner dies? The ownership interest will pass to the heirs pursuant to the will just like any other asset. Currently, the estate tax code provides that they will also receive a stepped-up tax basis to fair-market value. The income taxes which were deferred because of the 1031 exchange are potentially forgiven forever.

Types of Exchanges

The tax code allows five different types of property exchanges. This flexibility offers you, as a real estate buyer, the opportunity to structure a deal in the way that best suits your situation. The Delayed Exchange This is the most common form of exchange. When you make a deferred exchange, you first sell your existing (relinquished) property. Then, you purchase your replacement property. The Simultaneous Exchange This is an exchange in which your relinquished property and your replacement property are transferred on the same day. The Reverse Exchange This allows you to purchase replacement property before you sell your relinquished property. The reverse exchange is a strategy for investors who experience some difficulty finding a buyer for their relinquished property or who find a property they are eager to buy and must then decide which property in their current portfolio to relinquish. Personal Property Exchange This offers you the opportunity to make an exchange of investment property other than real estate. But, the like-kind property rule is interpreted more narrowly for personal property than it is for real estate. As a guide, the IRS provides an objective method of property classification. Under this method, personal property will be considered “like-kind” property if it is exchanged for property that falls within either the same General Business Asset Class or the same Product Class. The Construction Exchange This allows you to use a portion of the proceeds from the sale of your relinquished property to improve or build on your replacement property. This approach works well if your replacement property is less valuable than the property you relinquish. When a construction exchange is structured properly, you can use your improvement costs to equalize the exchange.

Waterford One, Midlothian,Virginia

Waterford One - Midlothian,Virginia The Waterford I Office Building located at 2820 Waterford Lake Drive offers a rare opportunity to acquire a Class A office building in one of the fastest growing areas in theRichmond suburban marketplace. Situated along a lake near the intersection of Coalfield Road and Genito Road, the Waterford I Office Building is within close proximity to the explosive retail growth along Hull Street and within minutes of Bon Secour’s Street. Francis hospital, Richmond’s newest medical complex. The retail growth along Hull Street is a direct result of the residential expansion from developments such as Brandermill and Woodlake. With the completion of I-288, the drive time between Chesterfield County and Henrico County is approximately twenty minutes making the building easily accessible to all parts of the Metropolitan area.

We offer free exchange services...

Welcome

For years, the principals of Greystone Real Estate Group have been dedicated to helping real estate purchasers diversify portfolios, control their financial plans and build wealth generation after generation. We serve the individual needs of every client with close, personal relationships.

Real estate purchasers seeking institutional quality replacement properties to fulfill the requirements of a 1031 Exchange consistently rely on Greystone Real Estate Group for secure solutions. We ensure all sensitive timelines are met and all net proceeds are reinvested in order to successfully defer capital gains. We offer the most dynamic real estate properties through our Tenants In Common program and we also offer our clients attractive alternatives for a Self-Directed IRA.

Greystone Real Estate Group, a National Real Estate Company is the smart choice for serious real estate buyers who value wealth and secure solutions.