Things to do when applying for 1031 exchange
When it comes to applying for 1031 exchange, few people know exactly what they have to do in order to benefit from the desired results. It is mandatory to follow some simple, yet golden rules in this process and probably one of the most important rules is to do some detailed online research and look for a professional and experienced 1031 real estate agent that could help you and guide you throughout this exchange. Here are some simple things you should do the moment you decide to resort to one of the 1031 exchange forms available.
Make sure you pay attention to time
One of the biggest mistakes people who apply for this type of exchange make is that they do not pay attention to the period within which they have to make the exchange possible. It is important to point out the fact that there is a period of 180 days whilst investors have to complete the transaction and that there is a period of 45 days (included in those 180 days) whilst the investors have to identify the right replacement property they want to exchange with. Many people consider that this period only includes working days, from Monday to Friday, which is why many of them exceed the deadline and lose he chance to make the exchange in time. These periods also include holidays and weekends, so make sure you do your maths and you do not exceed the deadline.
Make sure you choose the exchange property wisely
Another aspect you have to pay attention to when it comes to 1031 exchanges is that you have to be careful what property you choose to exchange yours with. Experts in the domain recommend that you select one that has either equal or greater value compared to yours, because this way chances for you to defer taxes significantly increase. If there is money you do not spend during this transaction, it will be considered capital gains, which means that you will eventually have to pay certain taxes. What is also important to remember is the fact that you cannot choose to exchange your vacation property, because these ones are used for no more than several weeks per year. Make sure that the property you want to exchange is either used in business or is an investment.
Resort to professional services of an agent
Although you may think that this 1031 exchange is not as complex as it seems and that you can handle it on your own, you have to be aware of the fact that a 1031 real estate agent can help you a lot and can guide your steps in order to benefit from the best results. In order to make sure you work with the best one on the market, you should do some thorough research on the internet and to find the best agent in the region.
As you can see, these are some very useful tips you should definitely keep in mind the moment you opt for 1031 exchange.