6 Requirements for Carrying Out a 1031 Exchange

If you want to carry out a successful 1031 exchange, there are six requirements you will need to fulfill. All six must be met for your exchange to be recognized by the IRS. Here is a helpful little summary to get you started.

1.   The Intent to Hold for Investment

Your primary residence cannot be exchanged with a 1031. But any real estate that is demonstrably being held for business, investment, or productive use in a trade can be exchanged.

2.   45-Day Identification Rule

From the day you close the sale on your old property, you have 45 days to identify a replacement property or properties. You must compile a legible list of your selected properties for the IRS. At the end of the 45-day period, the houses on your list are final and no more changes can be made.

3.   180-Day Exchange Period Rule

From the closing on the sale of your old property, you only have 180 days to complete the whole exchange. Or until your next required tax filing, whichever comes first. Make sure you time your exchange carefully.

4.   Qualified Intermediary (QI) Requirements

Finding a QI is vital to the success of your 1031. You must find a QI before selling your old property. If you sell your property before you find a Qualified Intermediary, then you cannot exchange that property using a 1031.

5.   Title/Taxpayer Requirements

The person who pays the taxes before the exchange must pay the taxes after the exchange. If a married couple jointly holds title to the old property, they must both hold the title jointly on the new property as well.

6.   Reinvestment Requirements

If you wish to defer all taxes, then you must reinvest all your proceeds. Money that is removed from the exchange becomes taxable to the IRS while the rest remains sheltered in the exchange.

This list should help you get an idea of what it will take to carry out a 1031. With an experienced Qualified Intermediary and respect for the rules, your 1031 should go smoothly.

To learn more about how you can utilize the power of a 1031 Exchange visit The 1031 Investor.

3 Benefits of Homesteading Your Primary Residence

Homesteading your principal residence has many advantages. Below are three reasons why you should definitely consider checking to see if your property qualifies for the homestead tax exemption.

1.   Tax Exemptions

Everyone loves a property tax cut. Homesteading a house in Florida grants you a property tax exemption that is based on the assessed value of your property. It is currently possible to have up to $25,000-$50,000 deducted from your property’s assessed taxable value.

2.   Protection of Your Property

A property that has been homesteaded is protected from forced sale to satisfy debts for personal loans. This means that if you wind up owing any credit card companies an enormous amount of money, they are forbidden from coming after your home. However, homesteading your property does not protect you from foreclosures for not paying your property taxes, mortgages, homeowners association fees, and construction fees. Even with a shield, it is always a good idea to pay off your debts in a timely manner.

3.   Protection for Your Family

Homesteading your property guarantees that your family will still have a home after you are gone. Homesteading ensures that if you are married and pass away, your surviving spouse and children will inherit the estate. Even if a will states otherwise the operation of law will protect your family from being displaced from their home. The signature of both spouses is required on all documents in a homesteaded property. Even if the property is titled in one spouse’s name only.

To learn more about how you can utilize the power of a 1031 Exchange visit The 1031 Investor.

What Are Florida’s Requirements for the Homestead Tax Exemption?

Homesteading your property in the state of Florida is a great way to cut down on property taxes and protect your home from creditors. But before you start filing the paper work it is important to make sure that the house you are homesteading meets all the requirements.

Only your principal residence may be homesteaded. The size of the property that may be homesteaded varies depending on where your house is located. If it is located within city limits, only half an acre may be homesteaded. However, if the house is located outside of city limits up to 160 acres may be homesteaded.

To be considered eligible when filing for the homestead tax exemption, you must have held the title to the property since the first of January. If you are applying for the first time, you must file an application with the county property appraiser’s office on or before the first of March. If your application has not been filed by March, the homestead exemption will not take effect until the following year. The procedure varies from county to county. Some counties will allow homeowners to submit the initial application throughout the year. Always make sure to talk to a local expert in your county.

To learn more about how you can utilize the power of a 1031 Exchange visit The 1031 Investor.