1031 Exchange Question

[Mike Dorneman]

I’m can’t get my CPA until Monday so I figured to check in with all of you! :) Wrapping up a buy and hold renovation and was approached to sell the property. I’m currently under contract on 2 other properties. The question: Am I able to use one of the other properties I’m already under contact on, to offset the sale of the first property and execute the 1031? I understand the timing to qualify for the 1031, I’m just unsure if I can use a property already under contact, or if I need to “identify” a new property after the sale of the initial property. Hope that makes sense!! Ty

[Dave Foster]

@Mike Dorneman, Yep @Stanley Bronstein and @Wayne Brooks are right on.  The order that you go into contract does not matter at all.  Only that the closing of your sale happen prior to the closing of the purchase.

The greater issue for you is building the documentation of your intent to buy and hold with the unsolicited offer to sell quickly.  Make sure you can document that and the unsolicited offer to buy completes the picture of someone who's intent was to hold but circumstances changed the intent.