I've read through IRS pub. 544 but thought I'd ask this anyway:
Let's say you identify 3 replacement properties within the 45 day period. On day 46 you find a property you like better. Is there any way to do the 1031 with the non-identified property?
I'm pretty sure the answer is no. I guess I just don't understand the reasoning behind the restriction.
Any help on this would be appreciated. Thank you.
No, that's why it's always a good idea to identify as many possible properties - there's NO downside to identifying more then you need.
Do you have to hand anything in to an official body on exactly the 45th day? Can you back date your choices when you do hand something in, like maybe the day you close?
Thank you both for the replies.
finniganps,
There's no downside to listing multiple properties but there is a limit. Unfortunately we (my brother and I) found a place we really like after the 45 day period passed.
bgrossnickle,
I'm not sure if the paperwork can be backdated. My brother is dealing with the exchange accommodator and has an appointment with him later in the week so we'll see if anything can be worked out.
There is no reason to wait until you have opened an exchange to locate potential replacement properties.
On two separate exchanges, I contracted to purchase some pre-construction properties almost a year before I identified them as the replacement properties in an exchange.
You do have a maximum of 45 days to formally identify your replacement property, but nothing says you can't start looking for replacement properties long before you dispose of your relinquished property.
Hi NewKidInTown3,
Thank for the feedback. I think I understand what you're saying. In this case we thought we had a great replacement property lined up and then sold the property to be relinquished. After the sale the owners of the replacement property we desired changed their minds about selling.
So we have two other properties listed as replacements with the accommodator. Then, after the 45 day period, we found what we consider a much better opportunity.
There's really no point to wondering, but still: why should the IRS care if you identify the property within 45 days or not if you make a like-kind exchange within 180 days?
This concludes the desperately grasping at straws portion of our program.
I appreciate the help, NKiT3.
If you purchase a property that is not one of your properly identified properties, then the exchange fails.
When Mr. Starker did the first delayed exchange, his exchange timeline was over two years. Over time, Congress has amended the tax code to set specfic timelines for certain exchange events often as a response to curtail abuses.
The tax code is law and the exchange rules are not flexible.
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On 2007-10-29 02:40, TracyH wrote: |
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Why not acquire this property with a straight purchase? Bring new financing and cash to the settlement table to purchase the property you want.
lf it is not on the market yet, the owner is not that anxious to sell, so you may have time to put this deal together.
Don't have ready cash for the downpayment? Get it by cashing out equity in your replacement property after the exchange closes. Talk with your favorite lender to see how quickly you can do a cashout refinance after you acquire the property.
If you need six months on title to do a cash out refinance, and the property owner won't wait that long, consider an equity loan against your primary residence. How about a personal loan at your bank? Is there a family member that will loan you the money?
If you really, really want this property, explore all your options
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