First time doing a 1031 exchange

[Angel Perez]

Hello, I'm asking for my in law. His selling a property in NC to buy another in IL and we'll like to know if the new property price should be based on the value of the house that's about $319k or on what he would keep that is about 200k after the sale? We don't know who handles this type of transactions and would like to know the right steps to take. One more thing his 75 and he wants to have his daughter in the title incase something happens the house is already under her name, is this possible with a 1031 exchange?

[Dave Foster]

@Angel Perez, I hope I was able to answer your question in your pm to me.  But for everyone else this might benefit - If you want to defer all tax you need to do two things - First you must purchase at least as much as your net sale (the 319Kish).  And you must use all of the proceeds from the sale in your next purchase.  You can purchase less than you sell and you can take cash out.  But you'll pay tax on the difference.

In order to do a 1031 exchange you must use the services of an unrelated 3rd party called the qualified intermediary whose only job is the administration of the 1031.  You use all of your regular professionals like usual and the QI is an added person.  We have to be involved prior to the closing of the sale of your old property.