Source: http://1031trx.com/1031-exchange-types/
Timestamp: 2019-04-19 07:07:19+00:00

Document:
A Simultaneous 1031 Exchange occurs in the rare occasion that the Exchanger is able to sell the Relinquished Property and purchase the Replacement Property simultaneously.
Even though the closings occur simultaneously, the sale proceeds from the Relinquished Property (the “exchange funds”) must go directly to a Qualified Intermediary and subsequently used to purchase Replacement Property on behalf of the Exchanger in order to qualify for the §1031 “safe harbor” provisions.
“Like-Kind” Property. The Relinquished Property and Replacement Property must be of “like-kind” and held for, or intended to be held for, investment purposes or for productive use in a trade or business.
Most 1031 exchanges are “Delayed 1031 Exchanges,” in which a Qualified Intermediary holds the sale proceeds from the Relinquished Property until Replacement Property is purchased.
•	45-Day Identification Period. Once the Relinquished Property is transferred, the Exchanger has 45 calendar days to identify Replacement Property. IRC §1031(a)(3).
•	180-Day Exchange Period. The Exchanger must close on identified Replacement Property within the earlier of: (1) 180 calendar days after the Relinquished Property was transferred, or (2) the Exchanger’s tax return due date (including extensions). IRC §1031(a)(3).
•	Three Property Rule. The Exchanger may identify up to three potential Replacement Properties, without regard to their fair market values (FMV). This is the most common identification method.
•	200% Rule. The Exchanger may identify any number of potential Replacement Properties, provided their aggregate FMV does not exceed 200% of the FMV of the Relinquished Property.
•	95% Exception. The Exchanger can identify any number of potential Replacement Properties, and if their aggregate FMV exceeds 200% of the FMV of the Relinquished Property, then Exchanger must receive at least 95% of the aggregate FMV of all the identified Replacement Properties.
In a Reverse 1031 Exchange, the Replacement Property is purchased on behalf of the Exchanger before the Relinquished Property is sold. An Exchange Accommodation Titleholder (EAT) holds legal title to either the Relinquished Property or the Replacement Property (known as “parking title”) until the Reverse 1031 Exchange is completed. Typically, the EAT parks the Replacement Property until the Relinquished Property is sold and the Reverse 1031 Exchange is completed.
Two key deadline still apply to the Reverse 1031 Exchange, which are strictly construed by the IRS: (1) 45-Day Identification Period after Replacement Property is purchased to identify Relinquished Property [usually already identifiable]; and (2) 180-Day Exchange Period.
•	Step 1. Exchanger enters into a purchase contract with a third-party seller and assigns its rights in the purchase contract to the EAT. Exchanger then loans funds to the EAT to acquire legal title to the Replacement Property.
•	Step 2. EAT acquires the Replacement Property and parks title. EAT leases the Replacement Property to the Exchanger until the Reverse 1031 Exchange is completed.
•	Step 3. Exchanger sells the identified Relinquished Property to a third-party purchaser. The sale proceeds (“exchange funds”) go to the Qualified Intermediary, which uses the exchange funds to purchase the Replacement Property from the EAT on behalf of the Exchanger.
•	Step 4. EAT uses the exchange funds to repay the Exchanger’s initial loan. EAT then conveys title to the Replacement Property directly to the Exchanger.
Note: If the sale of the Relinquished Property yields more funds than necessary for the Qualified Intermediary to purchase the Replacement Property from the EAT, then the Exchanger can identify additional Replacement Property within 45 days of the sale of the Relinquished Property and acquire that additional Replacement Property within 180 days as part of a conventional 1031 exchange.
In a Build-to-Suit 1031 Exchange, the Exchanger uses part of the “exchange funds” from the sale of Relinquished Property to improve the Replacement Property through construction or renovation before taking title. An IRS “safe harbor” allows the Build-to-Suit 1031 Exchange, provided that an Exchange Accommodation Titleholder (EAT) holds title to the Replacement Property until the improvement project is completed. Rev. Proc. 2000-37.
Exchange funds used for improvements after the Exchanger takes title to the Replacement Property are taxable boot. Treas. Reg. §1.1031(k)-1(e).
Two key deadlines apply to a Build-to-Suit 1031 Exchange, which are strictly construed by the IRS: (1) 45-Day Identification Period; and (2) 180-Day Exchange Period.
Note: The sale of the Relinquished Property and the purchase of Replacement Property should be done within a few days of each other to allow as much time in the 180-Day Exchange Period as possible to complete the improvement project on the Replacement Property.
Personal property held for investment or for productive use in a trade or business, such as construction equipment and company cars, can qualify for a tax-deferred 1031 exchange. The Personal Property 1031 Exchange is used to defer the capital gains tax that results from the sale of a depreciated business asset. Even though the business asset is sold for less than its original purchase price, the tax due on the amount subject to depreciation recapture can be high (e.g., the asset has been fully depreciated to an adjusted basis of zero).
Two key deadlines apply to a Personal Property 1031 Exchange, which are strictly construed by the IRS: (1) 45-Day Identification Period; and (2) 180-Day Exchange Period.
The requirement that 1031 exchange property be of “like-kind” is narrower for personal property exchanges than for real property exchanges. Personal property may be either of “like-kind” or of “like-class” to qualify for 1031 tax-deferral treatment. “Like-kind” refers to assets that are the same, such as a fork-lift exchanged for a fork-lift. “Like-class” refers only to tangible, depreciable personal property that falls within either the same General Asset Class or in the same Product Class. Treas. Reg. §1.1031(a)-2.
Intangible personal property (e.g., patents, licenses, permits, franchises) and non-depreciable personal property (e.g., valuable artwork, coin collections) must be “like-kind” to one another to qualify for 1031 tax-deferral treatment. Treas. Reg. §1.1031(a)-2(c). This “like-kind” rule is tightly construed.
In a typical Multiple Asset 1031 Exchange, the Relinquished Property and the Replacement Property each consist of a mix of real estate and personal property. This exchange type is used in exchanges of commercial real estate that includes business and investment personal property assets (e.g., hotels, rental buildings, laundromats, and restaurants with assets like furniture, fixtures, and vehicles all being transferred and received). However, the transfer and receipt of multiple properties within one “like-kind” or “like-class” group is also a Multiple Asset 1031 Exchange.
The sales contract for Relinquished Property and the purchase contract for Replacement Property should each include allocations of the purchase prices for the real estate and the personal property assets.
“Like-kind” Requirement. It is important to know that real estate may only be exchanged for other "like-kind" real estate and personal property assets may only be exchanged for other "like-kind" or "like-class" personal property assets.
All property in a Multiple Asset 1031 Exchange must be grouped into specific "like-kind" or "like-class" exchange groups. Treas. Reg. 1.1031(j)-1. The aggregate value and basis for all property within each exchange group is calculated, the values then compared between the Relinquished Property and the Replacement Property. Gain is recognized only to the extent that the aggregate value of an exchange group within the Relinquished Property is greater than the aggregate value of an exchange group within the Replacement Property. Treas. Reg. 1.1031(j)-1(b). Thus, the basis for the Replacement Property is specific to the exchange group instead of for the entire property. Treas. Reg. 1.1031(j)-1(c).
Two key deadlines apply to a Multiple Asset 1031 Exchange, which are strictly construed by the IRS: (1) 45-Day Identification Period; and (2) 180-Day Exchange Period.

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