WHAT ARE SOME EXAMPLES?

Dan and Cynthia sold two parcels of vacant land in Georgia for $91,000. They wanted to invest the proceeds from this sale in a different sort of property. They decided to purchase a single-family 3-bedroom, 2-bath ranch house on one acre in another area of Georgia for $89,000. They plan to rent the acquired property.

A limited liability company (LLC) sold a conservation easement to another builder, who planned to use the property for wetlands remediation. The LLC will use the $267,000 proceeds, along with financing, to purchase an office building that will be rented.

In Annapolis, Maryland, two individuals owned a 5 acre parcel of land. They joined with a corporation that owned a 9 acre parcel of land to create a 14 acre assemblage, which they then sold to an entity to develop the land into an apartment complex. One of the individual sellers also happened to be the president of the selling corporation. The two individual sellers did an exchange on their 5 acres, but the corporation did not participate in the exchange. The $850,000 is being held in an account in Maryland, pending closing on the replacement property.

Bill owned a small strip center where he operated his dentist’s office. He is 60 and thinking about retirement, and enjoys going to St. Augustine for golf every winter. An attractive offer of $700,000 is made and he would like to sell the center and exchange into 4 or 5 subdivision homes that can be used as rentals in St. Augustine. He can lease back his office until he retires and sell off the houses later, during his retirement. He can put the best house into the rental pool, using it himself 2 weeks a year, and then after he retires in several years he can spend the entire winter in that house.

ARE THERE TIME RESTRICTIONS?

NOTE: The content of this website is informational only. It does not constitute tax, legal or accounting advice. Each situation is different and you are advised to seek appropriate professional advice to see if a 1031 Exchange meets your needs.