Forward exchanges are the most standard of exchanges. They are what most investors first think of when they consider 1031 exchanges. However, as with any like-kind exchange there are a lot of potential pitfalls that can negate your exchange if you’re not careful. That’s why it’s always a good idea to consult a qualified intermediary before starting your exchange – 877.373.1031.
Forward Like-Kind Exchanges in Boston
A forward like-kind exchange is the most common 1031 exchange. Forward exchanges work this way – an investor sells a piece of property, they identify new replacement property that they want to exchange into, and then they roll all their net proceeds into that replacement property. The biggest benefit of a forward exchange is that you get to keep your money that would have otherwise gone to Uncle Sam in capital gains taxes working for you in a continued investment.
Boston Forward Exchange Requirements
All 1031 exchanges, regardless of what type, are governed by certain rules and requirements. Here is a brief 1031 requirement checklist:
- Intent Requirement. With any 1031 exchange you need to demonstrate that you have held your property for the right intent. Specifically you need to have held your property for use in your business or trade – personal property does not qualify.
- Like-Kind Requirement. Your replacement property and your relinquished property both need to be of like-kind. With real estate, this basically means that both properties need to be real estate. With personal property items, it gets a lot trickier.
- Value, Equity, Debt Requirement. You also need to make sure you are going up in value, equity, and debt with your replacement property.
- 1031 Deadlines. All exchanges need to abide by the 45 day / 180 day deadlines. You have 180 days total to complete your exchange, and the first 45 days to identify your replacement property.
You need to satisfy all of these requirements in order to have a successful exchange. As you can see, there are a lot of moving parts to an exchange, and a lot of potential for error. That’s why most savvy investors hire a qualified intermediary to help them with their exchange. A qualified intermediary can prepare your documents, answer your questions, and ensure your exchange goes off without a hitch.
Boston 1031 Exchange Company
If you are considering a like-kind exchange in the Boston area, contact our 1031 exchange professionals today. Our Boston 3rd party administrators have been facilitating exchanges for decades and have the knowledge and experience to help you through all the stages of your exchange. So whether you’re exchanging real estate or personal property, give us a call today to start your 1031 exchange – 877.373.1031.