The seller cannot receive or control the net sales proceeds – the proceeds must be deposited with a qualified intermediary.
The replacement property MUST be:
1) “like-kind” to Assigned Property – Both the assigned and replacement property must have been held for investment purposes or for productive use in a business or business.
2) identified within 45 days of the sale of the original property
3) Purchased within 180 days of the sale of the original property
The money invested in the replacement property must be at least equal to the money received from the sale of the assigned property.
The debt placed or assumed on the replacement property must be equal to or greater than the debt received by the transferred property.
This is a summary of some of the key guidelines for a Section 1031 transaction, but it is not an exhaustive list. The costs associated with an exchange under Section 1031 can affect the performance and outweigh the tax benefits of the transaction. Each prospective investor should consult their own tax adviser regarding the qualifications of a particular transaction under Section 1031.