FAQs About 1031 Exchanges
Mike Millea is proud to put his many years of experience to use in helping out clients when it comes to investment properties and real estate. As your source for all kinds of real estate help, he’s also provides unmatched experience and expertise in 1031 Exchange consulting for clients throughout the greater Los Angeles area.
We understand that 1031 Exchanges can sometimes be a confusing topic, so we’d like to answer some of the most frequently asked questions.
What Qualifies for a 1031 Exchange?
Any property that’s held for productive use in either a trade, business, or for investment can qualify for a 1031 Exchange and be exchanged for like-kind property.
What Doesn’t Qualify for a 1031 Exchange?
The tax code excludes some certain property even if this property is used in trade, business, or for investment. These types of excluded properties typically involve stocks, bonds, securities, notes, and interests in partnerships. Property that’s held “primarily for sale” is excluded as well. This can include business inventory and property that’s purchased with the intent to sell, such as a fixer-upper. Also, a primary residence doesn’t qualify for a 1031 Exchange as it’s not used in trade, business, or investment.
What Are the Time Requirements?
From the time that the relinquished property closes, the investor will have 45 days to nominate potential replacement properties. He or she will also have 180 days from this closing to acquire the replacement property.
What Information Is Needed to Structure an Exchange?
In most cases, the only information that’s required is the exchanger’s name, address, and phone number in addition to the escrow officer’s name, address, phone number, and escrow number. However, there’s also other information that we would prefer to have when reviewing your exchange. This includes:
- What’s being relinquished
- The cost of it
- When the property was acquired
- How the property was used during ownership
- Whether there’s a sale pending
- The value, equity, and mortgage of the property
- Who’s closing the sale
What Does a 1031 Exchange Cost?
The cost of a 1031 Exchange can vary depending on both the type of exchange and the circumstances. A simple swap of properties may only be about $500 while a Delayed Exchange could be about $800. Much more complex transactions can end up being somewhere in the thousands. Please feel free to get in touch with us if you’d like an exact quote.
How Do I Choose a Facilitator?
There are a number of different places where you can find facilitators. These include:
- Real estate agents
- Escrow companies
- The internet
Having said that, you need to pick a facilitator who has a wealth of experience in 1031 Exchanges and will be looking out for your best interests. By coming to Mike Millea for your 1031 Exchange, he’ll be more than happy to use his experience and knowledge to your benefit as he’ll make the process as convenient and efficient as possible.
Contact Your Los Angeles 1031 Exchange Consultant!
If you have any further questions about 1031 Exchanges or investment property, please don’t hesitate to contact us. If you’d like to schedule a meeting with your 1031 exchange consultant in Los Angeles, feel free to give us a call at (310) 939-9356. We’re looking forward to hearing from you!