The 1031 Exchange Timeline (and All The Other Rules!)

The 1031 exchange is a tax deferment device, and it needs to be a part of your real estate investment strategy. The timeline is the schedule you have to abide by to execute the exchange correctly.

It allows you to roll your profits from one investment property into the purchase of another like-kind property. It’s also described as a “like-kind exchange.”

If you follow the rules, you’ll save boo koo bucks because you won’t have to pay any taxes on the profit (for now). It’s important to note that your taxes are deferred, (similar to the way they are in many retirement accounts), not completely wiped out.

A 1031 exchange is a bit of complicated process, even for professionals. So you’ll need to work with a firm that handles the process for you. But honestly by doing that, the process becomes pretty darn easy!

One big part of the 1031 exchange is you need to “exchange” an existing property for a “like” property. In its original conception, the 1031 exchange applied when one property was directly swapped for another. 

For example, you can use the exchange when selling one rental property and buying another of equal or greater value. That said, there are four different kinds of like property exchange options. 

Generally, 1031 exchange rules apply no matter what state you’re in. But it’s always best to have an expert on your side. Screwing up the process will cost you thousands of dollars. 

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