The Basics of 1031 Exchange

The IRS provides that a taxpayer may sell property and defer payment of any capital gains tax if the taxpayer is using the proceeds to acquire which of the following?

Like kind replacement

Different kind replacement

None of the above

Which property type can be included in a 1031 Exchange?

Only commercial property

Only residential investment property

Both commercial and residential investment property

How do you determine a taxable or capital gain?

The selling price less the adjusted basis

The adjusted basis less the amount paid to make property improvements

None of the above

Following the close of a sale how much time does a taxpayer have, to complete the acquisition of the replacement property/properties?

185 days

180 days

45 days

What type property does not qualify for a 1031 Exchange?

Residential investment property

Residential primary residence

Commercial property

When must a taxpayer enter an exchange agreement?

After the date of transfer on the relinquished property

On or before the date of transfer on a relinquished property

None of the above

How much time does the exchanger have, to identify in writing the intended property to be acquired?

45 days

1 year

180 days

Which of the following are examples of like-kind real property?

Hotel

Farm

Both

Which statement best describes a boot?

Anything the taxpayer receives in an exchange that is like kind to the property traded in the exchange

Anything the taxpayer receives in an exchange that is not like kind to the property traded in the exchange

Anything the taxpayer receives outside of the exchange

What is the role of a Qualified Intermediary?

Prepare all real estate transfer documents in a transaction

Execute the closing documents as principal (as seller in the RQ closing and as buyer in the RP closing)

Assign exchange proceeds to a title agent to hold in their escrow account

The Basics of 1031 Exchange

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