1031 Exchanges in Texas
Are you a 1031 Exchange investor? Are you seeking investments to help you with your 1031 in the Central Texas area? Shire Commercial does help Clients identify and purchase 1031 Exchange properties within the Central Texas area, it is possible we can find you a property within the state of Texas as well if you are not interested in the Austin area. So what is the 1031 Exchange , if you are new to this situation the 1031 Exchange transaction is as follows:
- 1031 Exchanges are a tax deferred solution that offers taxpayers one of the last great opportunities to build wealth while saving on taxes.
- You can dispose of investment or business use assets , acquire replacement properties and defer your taxes.
To defer taxes , you must identify and
- a) Acquire “like kind”replacement property of equal or greater
- b) Purchase replacement property
- c) Reinvest all of your equity into the replacement property and
- d) Obtain the same or greater debt on the replacement property
Debt can be replaced by additional cash however, cash equity cannot be replaced by additional debt A 1031 exchange is rarely a swap of properties between two parties. Most exchanges involve multiple properties.
The 1031 Exchange Process
We can help you with the exchange process, how does the process work? Here are some snippets to help you understand how it works.
- Prior to closing sale of Relinquished Property, Shire Commercial will help you identify a Qualified Intermediary to work with you on your 1031 Exchange – this would require an Exchange Agreement.
- Prior to closing the sale of Relinquished Property, the Seller must assign rights under the sales contract to the Qualified Intermediary and provide notice of assignment to the Buyer
- At closing net proceeds are paid directly to the Qualified Intermediary (exchange funds) and are held in a separate account which will be used to purchase a replacement property.
- The Exchanger (you the seller of the previous property) has 45 days from the date the property is transferred to identify potential replacement properties thru Shire Commercial.
- The Exchanger can only acquire from the list provided of identified properties provided by their commercial real estate broker.
- The 1031 Exchanger prior to closing will notify the Qualified Intermediary to wire funds directly to the Seller or closing agent for purchase of the Replacement property.
- The final purchase must be completed by the earlier of the 180th day after transfer of the first Relinquished Property or the due date (incl extensions) for filing the Exchanger’s tax returns.
The Exchanger (taxpayer) who is selling the relinquished property would hire Shire Commercial as their commercial real estate broker to identify the properties while helping the Client negotiate and close on the selected property(s) solution. Shire Commercial will recommend the intermediary to help you with the exchange to make your transaction as seamless as possible.