On most cases the property of the tax payer is identified by his name of which it must be indicated. The reason being that he is the one who has all the legal documents that are required to verify the property including title deed. Making him to take full control of the property. In this we also have a single member liability company which can also act on the capacity of the member or collude with the member to purchase the property in their individual name.
We also have replacement rule which is also part of 1031 exchange. You should note that this rule can only operate within one hundred and eighty days after the closing of the first property. In addition, the property can also be bought and then replaced with the second property upon closing of the first property and the extension of exchangers return.
In addition to that another 1031 one exchange rule highlights and gives an allowance of 45 days for the post-closing of the first property. It acts as an allowance for the identification of either the accommodator or closing the entity address of the possible replacement of property. You should also note that the property will still be submitted for the purchase in situation when the replacement is packed. In some cases the three properties are identified regardless of their value commonly known as three party rule. Compared to two hundred percent rule which only gives chance for selecting of at most three property considering the fact that it should not be past two hundred percent of property sold. Apart from that there is also ninety-five percent exemption rule which give an allowance of ninety-five percent of what is identified to be bought if the value of the item sold exceeds two hundred percent of the property.
Another rule is on trading up. It allows for a tax difference of one hundred percent by balancing the net market value and the equity of the property. It also requires for the exchange to pay the tax on that difference. The difference is seen to the sense that additional equity can offset debts and vice versa is not true.
1031 exchange also takes some time to determine important things since they don’t have hold time. For instance, they can determine whether the property was acquired immediately before the exchange and many other additional supporting facts.
Another thing is that this rules only apply for investment or business property but not personal use. Meaning that you cannot swap your primary residence for another home.