REDFISH EXCHANGE, LLC is a “QUALIFIED INTERMEDIARY” for Exchange transactions. We are specifically structured to assist Exchangers and Real Estate Professionals in effecting successful IRC Section 1031 Exchanges. We fully understand the real estate transaction, the needs of the investor, and the technical requirements of the IRS.
REDFISH EXCHANGE, LLC can initiate documentation for exchanges with as little as twenty four hours notice. We furnish all the paperwork and necessary forms. We also consult with the real estate professional, tax consultant, and legal advisors involved in the exchange. We have been in business over twenty years and have a national presence in the 1031 exchange field.
The 1031 tax deferred treatment of capital gains is one of the best real estate investor vehicles for preserving and building real estate wealth. Section 1031 of the Internal Revenue Code allows property owners to exchange their property for other like-kind property. This makes it possible to transfer the financial gain that is realized from the sale of a property into another property and defer the payment of capital gains tax. A 1031 Deferred Exchange is not difficult, but there are very strict rules and timetables that must be followed. On the following pages is a discussion of these rules. If you have any questions just call us. We will help you all the way.
A. Common Terms
1. RELINQUISHED PROPERTY: This is the property you now own and are planning to sell or exchange.
2. REPLACEMENT PROPERTY: This is the property or properties (there can be more than one) which you are planning to purchase.
3. NON RECOGNITION OF GAIN: IRS terminology which means you don’t have to pay the Capital Gains Tax on the transaction.
B. Exchange Requirements for Non Recognition of Gain
1. The properties exchanged must qualify, and be of “like kind”
a. Like-Kind refers to your use of the property and not to its grade or quality.
b. “1031 property may be mixed as to type and still be like-kind. As an example, you may exchange land for a duplex, or a commercial building for a condominium unit. (Second homes that have never been rented do not quality if it is used solely for personal use).
c. Property held outside the USA and its territories does not qualify for exchange with property held within the USA.
2. The time requirements must be strictly followed.
a. The period of time to “Identify” the replacement property begins on the date of closing of the exchange property and ends 45 days later. The replacement property must be identified in writing, and delivered to the facilitator by midnight of the 45th day after the closing of the relinquished (exchange) property. In identifying, the replacement property it must be unambiguously described. We recommend that you use either a legal description or a specific street address.
b. The period of time in which the replacement property must be received by the exchanger begins on the date of closing of the exchange property and ends on the date that the tax return of the taxpayer is due, including extensions, or in 180 days, whichever is earlier.
We also routinely do reverse and construction exchanges which are slightly more complicated but hugely beneficial for investors who meet the criteria or have the circumstances where these transactions are appropriate.
Give us a call and we will assist you in determining if your circumstances lend themselves to the 1031 exchange process.
REDFISH EXCHANGE, LLC