1031 Exchange Rules - The Basics

1031 Exchange - What You Need To Know

A 1031 exchange is allowed by the Internal Revenue Code for real estate owners that hold property for business, or investment, purposes.


A 1031 exchange needs to be set-up with a Qualified Intermediary prior to the sale of your relinquished property.


Once your property has sold the proceeds from the sale must be held in a Qualified Escrow account. As the exchangor you may not have control over, or constructive receipt of, these proceeds until after the exchange is completed.


Once your property has sold you have 45 days to identify a replacement property under the Internal Revenue Code rules. You have 180 days of total exchange period to purchase a new replacement property. The 45 day identification period and the 180 day total exchange period run concurrently.


You DO NOT have to reinvest all of your sales proceeds, however you will be taxed on any proceeds that are not reinvested. Any proceeds distributed to you as the exchangor are called taxable boot.


You can reinvest your exchange proceeds in more than one replacement property. You may also take the proceeds from multiple relinquished properties and purchase a single property.


For a 1031 exchange in Big Sky or a 1031 exchange in Bozeman simply call us at 406-425-2742.

1031 Exchange Advisory Services

1031 Exchange Advisory Services