Can Randy provide tax or legal advice on a 1031 exchange?

No. Randy provides real estate and mortgage guidance. Investors should coordinate exchange structure, tax treatment and legal questions with a qualified intermediary, CPA and attorney as appropriate.

COLORADO 1031 EXCHANGE & INVESTMENT PROPERTY

Coordinate the Sale, Replacement Property and Financing Before the 1031 Clock Starts

A 1031 exchange can involve real estate, financing, tax deadlines and multiple professionals at the same time. Randy Reed helps Colorado investors evaluate the relinquished property, replacement-property search and financing strategy together while coordinating with the investor's qualified intermediary and tax advisors.

DISCUSS MY 1031 PLAN SEARCH COLORADO PROPERTIES

1031 Exchange Planning Is More Than Finding Another Property

For qualifying real estate held for investment or productive use in a trade or business, Internal Revenue Code Section 1031 may allow gain recognition to be deferred when the transaction is properly structured. The replacement property, financing, exchange deadlines, cash flow and long-term investment goals should be considered before the relinquished property closes.

Review the Relinquished Property

Evaluate likely value, equity, debt, selling costs, timing and the investor's objectives before listing or accepting an offer.

Coordinate the Exchange Team

Engage the appropriate qualified intermediary and coordinate tax and legal questions with the investor's CPA and attorney.

Define Replacement Criteria

Clarify location, property type, price range, projected income, financing needs and the investor's longer-term strategy.

Plan the Financing

Review down payment, debt structure, reserves, qualification and estimated cash requirements before identifying a replacement property.

Identify on Time

Work within the applicable written-identification deadline and the rules provided by the qualified intermediary and tax advisors.

Close the Replacement Property

Coordinate contract, appraisal, financing, title and exchange funds so the transaction can close within the required exchange period.

Key Federal 1031 Exchange Timing Rules

Replacement property generally must be identified within 45 days
Replacement property generally must be received within 180 days
The tax-return due date can create an earlier completion deadline
Written identification rules apply to deferred exchanges
A qualified intermediary is commonly used to facilitate a deferred exchange
Direct or constructive receipt of exchange proceeds can jeopardize treatment
Section 1031 applies to qualifying real property, not personal property
U.S. real property and foreign real property are not treated as like-kind to each other
Property held primarily for sale generally does not qualify
Personal-use property generally does not qualify under the investment/business-property rules

The 45-day identification period moves quickly.

That is why replacement-property and financing planning should begin before the relinquished property closes whenever possible. Randy does not act as a qualified intermediary and does not provide tax or legal advice.

Investment Property Financing Should Be Planned Alongside the Exchange

An exchange can defer qualifying gain, but the replacement property still needs to make sense as an investment. Purchase price, rent, vacancy, taxes, insurance, maintenance, reserves, financing costs and future exit strategy all affect the result.

Randy can help investors compare property and financing scenarios so that the replacement-property decision is based on more than simply meeting a deadline.

Common 1031 Exchange Strategies to Evaluate

Rental to Rental

Sell one investment property and evaluate another rental based on location, cash flow, leverage and long-term value.

Consolidate or Diversify

Explore whether the investor's broader strategy involves changing property type, market exposure or number of investment properties, subject to exchange rules.

Exchange Plus Financing

Coordinate exchange proceeds with new financing to evaluate replacement properties at a different price point or capital structure.

Frequently Asked Questions

What property can qualify for a 1031 exchange?

Section 1031 generally applies to qualifying real property held for investment or productive use in a trade or business and exchanged for other qualifying real property. Property held primarily for sale and personal-use property generally do not qualify.

How long do I have to identify replacement property?

In a typical deferred exchange, replacement property must generally be identified in writing within 45 days after transfer of the relinquished property.

How long do I have to complete the exchange?

Replacement property generally must be received within 180 days after transfer of the relinquished property, or by the due date of the applicable tax return including extensions, whichever is earlier.

Can I exchange one type of real estate for another?

Qualifying U.S. real properties can often be like-kind even when they differ in grade, quality or use. The specific tax treatment should be confirmed with the investor's tax advisor and qualified intermediary.

Can Randy provide tax or legal advice on my exchange?

No. Randy provides real estate and mortgage guidance. Exchange structure, tax treatment and legal questions should be handled by the appropriate qualified intermediary, CPA and attorney.