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Im selling real property and doing a 1031 exchange. The

I'm selling real property...
I'm selling real property and doing a 1031 exchange. The property I'm selling isn't under contract/in escrow. I have a property I'm buying under contract now. Assuming I can make the time line work, can I identify a property which I already have under contract for y exchange?
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Answered in 16 minutes by:
3/1/2013
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3,855
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Welcome. THANK YOU for choosing Just Answer. My goal is to help make YOUR life, a little...LESS taxing.

In brief, if the property meets the requirements, yes. SEE BELOW:

Owners of investment and business property may qualify for a Section 1031 deferral. Individuals, C corporations, S corporations, partnerships (general or limited), limited liability companies, trusts and any other taxpaying entity may set up an exchange of business or investment properties for business or investment properties under Section 1031.

To qualify as a Section 1031 exchange, a deferred exchange must be distinguished from the case of a taxpayer simply selling one property and using the proceeds to purchase another property (which is a taxable transaction). Rather, in a deferred exchange, the disposition of the relinquished property and acquisition of the replacement property must be mutually dependent parts of an integrated transaction constituting an exchange of property. Taxpayers engaging in deferred exchanges generally use exchange facilitators under exchange agreements pursuant to rules provided in the Income Tax Regulations. .

REFERENCE SOURCE:

http://www.irs.gov/uac/Like-Kind-Exchanges-Under-IRC-Code-Section-1031

Please let me know if I can be of further assistance to you regarding this matter.

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Customer reply replied 4 years ago
To the best of my understanding, there are particular timeframe s within which a property must be identified. Would it be possible, assuming the properties were like kind, for me to have identified the new property before selling the old?
Hello again Andy,

As I don't have the answer to that question and would need to research the matter for you, I am going to release the question back into the question queue so that another expert who has more familiarity with Section 1031 exchanges can possibly assist you further. I do apologize that I am unable to continue on with you.

Thank you again for using JUST ANSWER.
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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,857
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi Andy,

Like-kind replacement properties that you are considering for acquisition in your 1031 Exchange should be identified to your Qualified Intermediary (Accommodator) and must be identified no later than midnight of the 45th calendar day following the close of your relinquished property sale transaction. For example, if the sale of your relinquished property closed on October 31, your first day of your 45 calendar day identification period would be November 1 and the 45th calendar day deadline would be December 15th.

Here's a great site:

http://www.exeter1031.com/article_identification_rules_like_kind_replacement_property.aspx

lane, for Angela
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Hi Andy,

… just checking back in to see if I answered your question to your satisfaction.

If I’ve given you enough to make an informed decision, I would appreciate an “accept,” or a rating of OK or better. (That’s the only way they pay us here).

BUT, if you need clarification, be sure to come back, so you won’t have to pay for an additional question.

Thanks,

Lane

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Customer reply replied 4 years ago
Great answer. All I'm unclear about if if the identification can be a property which I already have in escrow pending closing?

Yes it certainly can.

The only limitation (in terms of time) is that you identify it QUICKLY enough.

Your situation actually insulates that issue.

Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,857
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Thanks so much Andy.

All the best

lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,857
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,857
12,857 Satisfied Customers
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