LIKE KIND EXCHANGES
We represent sellers in structuring their like-kind exhange transactions to comply with the various rules and regulations per §1031 of the IRC. §1031 is a defer provision in the Code by providing for deferment of taxes, if the Seller invests in Like-Kind Property within a certain period of time. In most cases the property can be identified after the 1st closing and a 3rd party intermediary can be utilized to hold proceeds, thus giving the Seller more time to structure the transaction. Our services include the following:
For the initial leg of the transaction (the sale)
- Negotiating the sales contract, negotiating the 3rd party intermediary contract. Preparing agreement with the intermediary.
- For transactions where the Seller is taking back a note, structuring the transaction to minimize the ramifications of the note being deemed Boot and thus taxable. Preparing and negotiating the notes, mortgage and other documents needed to secure the obligation.
For the 2nd leg of the transaction (the purchase)
- Analyzing alternative replacement property.
- Negotiating and reviewing the contract, preparing identification documents needed within 45 days, correspondence with the intermediary re. the same.
By following the rules and procedures of §1031, we can properly structure the transaction to defer the tax obligations, minimize any potential boot received, and complete the transaction.
We work with many accountants, and exchange companies in the tri state area, in advising their client on §1031 and completing the process. The clients’ goal of diversifying their investment is satisfied, and the clients’ other objectives including limited cash outs, greater income stream, etc can be achieved. The accountants are needed throughout the process as the financial adviser to their clients.