A retirement savings plan, sponsored by an employer, in which tax-deferred contributions, deducted from an employee’s salary or wage, are put towards savings and investing into their own retirement. Some employers may offer to match employee contributions up to a specific percentage or dollar amount.
It’s stated under section 1031 of the IRC that an exchanger or taxpayer carrying out a delayed exchange, has 45 calendar days to identify a replacement property or properties. There are rules to limit how many properties they may identify, such as the Three Property Rule, allowing them to select and acquire up to three replacement properties, regardless of value.
The 200% Rule, however, states that an exchanger or taxpayer may identify more than three properties as long as the combined total fair market value of the identified properties is not greater than 200% of the relinquished properties' fair market value.
180-Day Exchange Period
Outlined under section 1031 of the IRC code as a 180 calendar day period of time in which the acquisition of a relinquished property must be completed, and legal and equitable ownership of such property(ies) must be transferred over from the seller to the buyer. A 180-day exchange period also runs concurrent with the 45-day Identification Period.
Defined under section 1033 of the IRC code, a 1033 exchange defers investors from paying capital taxes on a property that was involuntarily lost due to condemnation, casualty, or theft. Though similar to a 1031 exchange, a 1033 exchange is not subject to strict requirements and is only an option for investors who were forced to renounce their property, such as in the case of a property being severely damaged by a natural disaster.
1031 Exchange (or Like-Kind Exchange)
This type of exchange is defined under section 1031 of the IRS code as a strategy that allows investors to defer paying capital gains taxes on an already sold investment property as long as the profit gained from the sale is “exchanged” or used to purchase a like-kind real estate property, meaning it’s equal or greater in value.