Q: What is the timeline to complete an exchange?

The replacement property must be identified within 45 days of the sale of the initial property. An investor has a total of 180 days (or 135 more days from the identification) to close the purchase of the new property.

Question 1

What is a 1031 or like-kind exchange?

Accepted Answer

A 1031 or like-kind exchange is a tax break that allows real estate investors to swap one property for another to defer capital gains tax.

Question 2

How much can I defer in taxes?

Accepted Answer

In a 1031 exchange, the investor can defer the full amount of capital gains tax on the property sale if the exchange property is equal to or higher in value. Investors will be responsible for tax on the difference in price between the two properties: if the exchange property is of lesser value, debt has been paid off that will not be included in the amount of the new property, or potentially on previous depreciation deductions. Talk to one of our Qualified Intermediaries for more information.

Question 3

What is the timeline to complete an exchange?

Accepted Answer

The replacement property must be identified within 45 days of the sale of the initial property. An investor has a total of 180 days (or 135 more days from the identification) to close the purchase of the new property.

Question 4

Does debt qualify?

Accepted Answer

The investor does need to replace the value of the debt on the property the investor is selling. However, the debt does not have to be replaced with debt. Investors may choose to pay down debt and replace that amount in the exchange for the new property.

FAQ

What is a 1031 or like-kind exchange?

How much can I defer in taxes?

What is the timeline to complete an exchange?

Does debt qualify?

What is depreciation recapture?

Is there a required holding period for a property?

Compliance.

Castling is a Qualified Intermediary and member of the Federation of Exchange. Escrowed funds are stored in FDIC-insured accounts at trusted banking institutions. Castling is SSAE 16 certified and SOC 1 and SOC2 compliant to ensure client data security.

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