1031 Exchanges

How Does a 1031 Like Kind Exchange Work

A 1031 Like Kind Exchange is usually a three-way delayed exchange referred to as a “Starker Exchange” in which a Qualified Intermediary (Q.I.) is used to facilitate an exchange of property.

There are four essential steps for the Exchanger to take to complete a 1031 Like Kind Exchange.

  1. Sign a contract to sell investment property to a buyer that contains Exchange Language in the purchase contract.
  2. Identify and assign Exchanger rights to a Q.I., including the right to receive direct deposits of exchange sale proceeds from the relinquished property.
  3. Identify Replacement Properties and notify your Q.I. of replacement properties to be considered within 45 days of closing.
  4. Complete the acquisition of replacement property within a maximum period of 180 days in the exchange period or until the tax-filing deadline, including extensions, for the year of the sale of the relinquished property.

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