1031 Exchange

A 1031 Exchange is a powerful way real estate investors can defer capital gains taxes from the sale of an investment property by rolling the proceeds/equity into the purchase of another property. Many of our clients have substantially increased their returns and wealth by utilizing a 1031 Exchange.

Whether you’re looking to execute a 1031 Exchange in Denver, Broomfield, Thornton, Boulder or anywhere in the state of Colorado, we can potentially help.

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Defer Capital Gains. Increase Purchasing Power.

New to a 1031 Exchange? Let’s explore the basics:

If you have a property and sell it at a gain, you may be able to defer the capital gains tax by purchasing another property of equal or more value. In essence, this is a tax break. If used correctly, there are no limitations to how many 1031 exchanges you can execute.  It’s called a 1031 Exchange because it’s in reference to the Internal Revenue Code that defines it.  We always recommend using a 1031 specialist (or a Qualified Intermediary) to help facilitate the transaction.  We also recommend you speak with a tax professional who is well versed in 1031 exchanges.

 

After you sell your property and the funds get transferred to a Qualified Intermediary, you enter the 45 day identification period to find a replacement property(ies). After the 45-day identification period is completed, you have 180 days to close on the replacement property. The 180 days is from the date you sold your original property. So if you use all 45 days to identify a property, you have 135 days left to close on the replacement property.

 

During the 45 identified period, the exchangor can identify up to 3 properties - commonly known as the 3 Property Rule. The exchangor may acquire 1 or all 3 properties just as long as there is at least 1 replacement property that is acquired within the 180 day period that is of equal or greater value than the relinquished property.

Another popular type of 1031 Exchange is the Reverse Exchange where basically you buy your replacement property first and then sell the property you want to relinquish. Like forward exchanges, you must use a Qualified Intermediary.

Interested in working with us? 

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Basic Steps of a 1031 Exchange

1

Prepare for the exchange by speaking with your 1031 Specialist, Tax Advisor and Real Estate Broker.

2

Sell your Property. If it's Colorado, we may be able to help!

3

Identify your replacement property. You have 45 days to identify up to 3 properties of equal or greater value. 
(You may be able to buy more than 3 properties - email or call us to learn more about that.)

4

Close on new/replacement property(ies). If you're buying in Colorado, we may be able to help!

5

Congratulate yourself for completing a 1031 Exchange!