Can I get an agent and then sell aprop and then get an exchange and buy another prop anywhere thats same valu or more to defer taxes? I am real foggy on this? Thanks
You have the basic idea, just the sequence of events needs to be adjusted.
If the property you already own is used for an investment purpose, then get the property under contract to sell. Whether you use a real estate agent or sell yourself is up to you.
Get a qualified intermediary who will draw up an exchange agreement and establish an exchange escrow account.
Go to settlement on the property you are planning to sell.
Acquire a replacement investment property with a value equal to or greater than the property you sold.
This is the general outline of a tax-deferred exchange. There are specific rules and timelines that govern a 1031 exchange. If you fail to meet the timelines, or fail to follow even one of the rules, your exchange is disqualified and the sale of your investment property becomes a taxable event.
Can my atty or title cleark do that or a special person? and where do you find them? I am in NC. I am buying prop this week and wanted to get this done before I buy it. Thanks for any help.
Call a title company to get a referral to the 1031 intermediary company.
Your attorney could probably draw up the escrow exchange agreement for you. If you already have a client relationship with your attorney, your attorney is not eligible to be your qualified intermedary. Your bank’s trust department could act as your qualified intermediary. If the sale of your relinquished property and the purchase of your replacement property will be competed by the same settlement attorney who is not your attorney AND the two transactions will close within a day or two of each other, then that attorney could probably be your qualified intermediary.
However, you only mentioned buying a property. If you are buying a property this week, how will you pay for it? Have you already sold something which provides the funds to complete a 1031 exchange? If you have not already sold an investment property, will the settlement occur prior to purchasing this property this week?