Are you stuck in the middle of your 1031 property identification period? Can’t you find an ideal replacement property? Well, the outbreak of COVID-19 has certainly compelled everyone to stay inside the four walls. As a result, people are facing serious complications across all industries, especially 1031 exchange investors.
Since the last year, property identification has become a nightmare for 1031 investors. The fear of getting infected by a virus and the pressure of finding replacement properties within 45 days has made things difficult for them. However, there are those who have not only identified replacement properties on time but have also completed their 1031 exchanges successfully. The question is, how? Before we get to the answer, let’s pay brief attention to the 1031 property identification guidelines established by the IRS.
1031 Property Identification Guidelines-
Here are 1031 exchange guidelines established by the IRS –
- An investor must identify one or more replacement properties within 45 days of selling their relinquished property (previous property).
- Property identification must be hand-delivered, mailed, telecopied, or faxed on or before midnight of the 45th day.
- Property identification in writing must be sent to the QI (Qualified Intermediary) or any person-in-charge of the 1031 exchange other than the investor.
- The investor must thoroughly describe each property in the identification, including its location, area, price, and so on.
- NO EXTENSION SHALL BE GIVEN IF THE INVESTOR FAILS TO SUBMIT PROPERTY IDENTIFICATION IN TIME (UNLESS IT’S A NATURAL CALAMITY OR IF THE 45TH DAY TURNS OUT TO BE A HOLIDAY).
How Many Replacement Property Can You Identify?
As per the following 1031 property identification rules, you can identify multiple replacement properties at once –
- Three Property Rule – You can identify up to three replacement properties irrespective of their market value.
- 200% Rule – You can identify any number of replacement properties as long as the total market value of all properties does not exceed 200% of the market value of the relinquished property.
- 95% Rule – You can identify any number of replacement properties as long as the market value of the properties acquired at the end of the exchange is at least 95% of the total market value of all identified properties.
Now that you know all the rules, let’s find out how you can close your 1031 property identification without leaving your home.
Look For A Reputed 1031 Exchange Company
If the COVID-19 pandemic has shut businesses, it has also made people look out for alternate ways to get things done. With that said, a few 1031 exchange companies have started providing 1031 exchange services to investors right in the comfort of their homes. Right from property identification to closing the entire exchange, everything is taken care of by 1031 experts. However, before you start your hunt for a 1031 exchange company, you may not want to land into a negative deal. So, choose your 1031 exchange facilitator carefully.
1031Xchange.com is one of the trusted names in the 1031 exchange arena. Connect to one of our experts to get started with your 1031 exchange.