You will need to follow six primary rules for your exchange to meet stringent IRS regulations:
1. Real Property Use
Both your Old and New Properties must qualify as investment
or business use. If both properties pass this test, you can
exchange nearly any type of real estate.
2. 45-Day Identification Period
You have 45 days from the closing of your sale to list the
properties you may want to buy. There are no exceptions
to the deadline.
3. 180-Day Exchange Period
From the sale closing date, you have 180 days to close on
the purchase of one or more properties from the 45-day list.
Again, there are no exceptions to this deadline.
4. Qualified Intermediary (QI)
The IRS mandates that you use a QI to prepare the legal
documents for your exchange. The QI must also hold your
money, so that you do not have access to it. A segregated
account is the only safe way for a QI to hold this money.
5. Proper Title Holding
You must purchase and take title to your New Property
exactly as you held title to your Old Property.
6. Reinvestment Requirement
To defer all of your capital gain tax, you must buy a property
equal or higher in value than the one you sold. Also, you must
reinvest all the cash proceeds from your sale.
Citywide Exchange will do everything in our power to help
you meet these requirements and successfully complete
your exchange.
Call 303-531-5769 to speak to a Citywide Exchange representative.
