All Forum Posts by: Lauren Speidel

@Dan Earl Yes! If you are selling a rental property and have the intention of purchasing another, a 1031 Exchange may be a perfect solution for you. Section 1031 of the Internal Revenue Code allows you to defer any gain and depreciation recapture liability. There are requirements you must follow to have a successful 1031 exchange but they are fairly simple and the process can be stress-free is you enlist the help of a reliable and experienced Qualified Intermediary. You would need to set up an account with a QI prior to closing on the sale, you are unable to take receipt of the funds, then you have 45 days to identify your replacement property or properties using a specific identification rule, and then another 135 days to close on one or all of those properties. Your goal would be to trade equal or up in value from your net sales price. This can be a wonderful estate planning tool as well. If you continually do 1031 exchanges when you sell your rental properties, eventually when you pass away (not fun to think about) your heirs are not responsible for paying back the depreciation and tax you've deferred. Please let me know if you would like to discuss your particular transaction in more detail.

@Tamara Glass - I'm not sure why I couldn't tag you in the last post.

@Tamara Glass I will PM you a very good CPA who has extensive real estate experience.

@Robert Wong If you move back into your rental and convert it to a primary residence and live there for at least two years you will be able to qualify for the 121 Exclusion. The Exclusion allows you to sell your primary residence and exclude from gross income up to $250k for a single taxpayer and $500k for a married couple. You must have owned and lived in the property as your primary for at least a total of 24 months out of the last 60 months. Since the previous three years were a rental the Exclusion will be prorated. The proration is calculated based on the number of years the property was used as your primary.  Therefore, the longer you use that property as a primary the more exclusion you will receive.

@Joseph Ward Are you looking for a local CPA? I'm assuming you have real estate investments? Is there anything else that may make your return more complicated? I have a lot of contacts who are CPAs and would be happy to refer you to someone. I always like to gather information about what qualities or experience the referral should have so I can fit you with the right one.

@Tracy Bogie I know a Financial Advisor who may be a great resource for you. Not only does he understand real estate investing but he also is a CPA. He is located out of Michigan. I've worked with Financial Advisors for over 10 years and can provide you a number of referrals. That way you can interview them and determine which one you like best. Now I work for a nationwide Qualified Intermediary and have retained those relationships. I would be happy to PM you my contact information.

@Zach Bajalcaliev as @Dave Foster mentioned you are able to do a 1031 exchange is your business is both real estate and personal property.

The IRS has a very broad term of like-kind when completing a real property 1031 exchange. Any real estate is like-kind to any other real estate. Therefore going from one building to an apartment or strip center should not be an issue. One requirement (and there are many) is that your replacement property be equal or higher in value than the one you sold.

If you are doing a 1031 exchange on personal property the IRS is very specific. Not only must the property be exchanged for the same type of property sold but it also must be used in the same manner.

@Elaine Hester 1031 exchanges can be complicated and there are a number of requirements that an investor must satisfy to have a successful transaction. The first step is to start discussing your transaction with Qualified Intermediaries. I would recommend choosing a company that is insured and bonded, reputable, reliable, and experienced. They should be able to guide you as you proceed to make sure you are following necessary deadlines and requirements. There are certainly things that can go wrong but if you’re working with a good QI and speak with them prior to making any major decisions, it should be a stress free experience. 

@Michael Kehoe In order to successfully complete an Improvement/Build-to-Suit exchange all construction needs to be completed within the 180 days. You will need to hire a third party to document how much has actually been constructed. I would recommend as much documentation as possible (photos, videos, notes, etc.). You would need to not only enlist the help of a Qualified Intermediary but also set up an arrangement with an Exchange Accommodation Titleholder (EAT) and they will hold title to your new property while construction is completed. Some QIs have the ability to act as both. Therefore, if you obtain a construction loan it would have to be in the name of the EAT which is usually an LLC structure. There are other agreements that must be in place prior to moving forward and as you can see they can get pretty complicated. You will want to choose a QI that has the experience to safely handle the transaction.

@Tatyana Shevnina @John Moksnes  Thank you! Wrong word choice there. The taxpayer would not be responsible for paying that portion back. It is excluded.