1031 real estate exchange questions

[HandsOn]

I am thinking about selling a rental property and 1031 exchange it into a fixer, then sell the fixer for profit without ever putting any tennants into it, then roll it over to a 1031 exchange again. Has anyone tried this.

[Red Eye]

It's called flipping properties and most lender's frown on it.

[Brian Ray]

It's done all the time...... :wink: Happens a lot in commercial real estate. Just watch out for prepayment penalties when borrowing money from a lender.

[Tequila-John]

Just know that with a 1031 exchange you have to roll ALL profits into the next property. Not just a % but all.............

[Havasu Luvr]

I just did a 1031 Exchange on property, sold property in Cali and bought in LHC. You instruct Escrow to transfer all funds into the 1031 Exchange. The balance of funds in the 1031 exchange can be withdrawled to yourself but you would need to claim it as Capital gains at the end of the year. You will have 180 days while your in a 1031 exchange to invest your monies. Make sure you have a rept company. The fee should be around $600 depending? You can also have your 1031 Exchange deposit your funds into an Interest Free account or an Account that drawls interest. This has been my experience.............

[Lightning]

I help a lot of clients with 1031 exchanges. If you have questions or want feedback on guidelines, timesframes, etc... give me a call 619-246-1897 - Ari

[ChumpChange]

Just make sure you know the timeline of your 1031 as well as how long it is going to take to get financing for your next venture. There's nothing more stressful than a 1031 that is about to expire for one of my borrowers.
ChumpChange
(Commercial Real Estate Lender, Owner Occupied & Investment)

[CJ]

Ask Dan on the board or call my wife Gilda at 714-612-4702. She has handled several over the last year and is in the middle of an escrow with one right now.
Great luck!

[truksnboats]

Hey Chump, what company do you work for?

[switchin'addiction]

It is done all the time, just have to watch your time lines & deadlines as was already mentioned. I'm not soliciting business by saying this because I'm only licensed in the midwest, but if you want to pm or email me the scenario I'd be more than happy to give you my opinion & maybe offer another alternative for you. Just trying to help out a fellow boater!

[locogringo]

and it has to be of said kind...

[core attitude]

and it has to be of said kind...
Just to clarify.......I believe you meant "like" kind. :)
Key to a smooth exchange is:
1) Your Realtor
2) The company running the exchange.......many times this is can/will be choosen for you ie: Asset Preservation Inc. is a subsidiary of Stewart Title, IPX is a subsidiary of Fidelity National etc.
Some things that haven't been mentioned are,
1)There are "holding" period issues, the 1031 clearly states that property "held for productive use in a trade or business or for investment". If you plan on flipping using this method you better be able to show it was "held for investment". Some say to be safe at least you should hold it for 12 months, that way you can show it as an investment property for 2 tax filling years.
2)Time lines change depending on the time of year......the ID period ends at midnight on the 45th day after you sell your property but the exchange period ends on the earlier of, 180 days after the close of your property or and this is something to be aware of if you don't start this till after the new year, the due date for the exchanger's tax return. An extension needs to be filled to get the full 180 days.
Just make sure you work with a qualified Realtor who you feel comfortable with and has some exchanges experiance and you will be fine. Communication is key and will keep you out of identification and time line trouble and the rest is up to the accommodater. ;)
Pete

[locogringo]

Core, I was too lazy to make my mind retain the right word, you are right. And thanks for posting the rest also. Dead-on. You could get away with 6 months but I would hold for a year also to show two years of taxes. Thanks for bringing that up.
Daniel

[core attitude]

Core, I was too lazy to make my mind retain the right word, you are right. And thanks for posting the rest also. Dead-on. You could get away with 6 months but I would hold for a year also to show two years of taxes. Thanks for bringing that up.
Daniel
No problem, I saw the time of your post and figured it was just a brain fart. :wink:
Pete

[Charley]

It's called flipping properties and most lender's frown on it.
I've done it twice in a year... its not that bad