Tools and Investment

You must pay very close attention to the timing rules set in place by the IRS.  When the property is sold and the title passed to the buyer, the timing requirements to locate and acquire the replacement property begins.  You have only 45 days to create a printed list of up to three possible replacement properties delivered to your Facilitator.

A signed and dated Earnest Money Agreement is also an accepted alternative to the written list.  If you want to identify more than the three possible replacement properties, there are two ways to go about it.  The 200 Percent Rule allows you to identify more than three properties, providing that all of them add up to no more than twice the sales price of the property you sold.  The 95 Percent Rule allows you to identify as many properties as you’d like, as long as 95% of the fair market value of the properties identified are actually acquired.  That means that if you identify five properties totaling $100,000, you have to acquire at least $95,000 of worth from that list.

Remember, you must follow the 180 Day Rule!  It says that you must acquire your replacement properties before 180 days from the date of closing of the first sale or the due date for the tax returns, including extensions, for the year of the sale. 

If you fail to correctly and timely recognize your potential replacement properties, or fail to obtain titles to all of the replacement properties in time, the IRS can prohibit the entire exchange!

Timing is everything with the IRC 1031.  Let Heaven Investment help you realize your earning potential in a timely fashion.