1031 Exchange Guidelines and Deadlines

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By Orrin Barrow, Vice President

Kay Properties & Investments, LLC The 1031 rules state that you have EXACTLY 45 days after the date of sale to identify property and EXACTLY 180 days to complete the sale of that property. Within your 45 Days Identification window you can utilize three permissible identification methods. The first and most common for traditional 1031 exchanges are “the three-property rule” This states that you can identify 1, 2 or 3 properties, regardless of value. The policies also state that while using the three-property rule, you are not obligated to purchase all of the properties identified. You can purchase 1,2 or all three properties at your discretion. The second rule that many DST investors utilize is the “200% rule.” This rule stipulates that you can identify up to 200% of the value of your relinquished property. For example, if you sell your relinquished property for $1 million you have the opportunity to identify up to $2 million worth of property. DSTs investors often utilize the 200% rule because their DST choices for a diversified portfolio 1031 solution exceed the three-property rule. The last ID rule that exchangers can utilize is the “95% rule.” This rule states that you as an exchanger can identify more than three properties with a total value that is more than 200% of
the value of the relinquished property, but only if the investor acquires at least 95% of the value of the properties they have identified.

It is imperative that you as an exchanger understand how the rules work. One of the reasons is to make sure that you’re in line with IRS guidelines with the guidance of the qualified intermediary. It should also be noted that if you are looking to remove any of your 1031 exchange proceeds from your QI / Accommodator you must do so before your 45 Day Deadline. Due to regulation, once an exchanger passes the 45th ID deadline date, they must either invest their proceeds into properties that have been identified, or the QI will withhold the proceeds until after the 180th day. Once the 180th day is reached, funds will be released back to the exchanger and the investor will likely be liable for the taxes they owe on the amount that was received. If you would like more guidance or suggestions on your upcoming 1031 exchange please feel free to contact Kay Properties and Investments, LLC. We will promptly have a representative contact you to walk you through the steps to have a successful exchange.

About Kay Properties and Investments, LLC:

Kay Properties and Investments, LLC is a national Delaware Statutory Trust (DST) investment firm with offices in Los Angeles, San Diego, San Francisco, Seattle, New York City and Washington DC. Kay Properties team members collectively have over 94 years of real estate experience, are licensed in all 50 states, and have participated in over $9 Billion of DST real estate. Our clients have the ability to participate in private, exclusively available, DST properties as well as those presented to the wider DST marketplace; with the exception of those that fail our due-diligence process.

To learn more about Kay Properties please visit: www.kpi1031.com

This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. This email contains information that has been obtained from sources believed to be reliable. However, Kay Properties and Investments, LLC, WealthForge Securities, LLC and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. This material is not intended as tax or legal advice.

There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals and risk tolerances.

Securities offered through WealthForge Securities, LLC, Member FINRA/SIPC. Kay Properties and Investments, LLC and WealthForge Securities, LLC are separate entities. There are material risks associated with investing in DST properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi- family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to see any securities. Please read the Private Placement Memorandum (PPM) in its entirety, paying careful attention to the risk section prior to investing. Diversification does not guarantee profits or protect against losses.

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