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Calculating Tax Liability

What Will Your Tax Liability Be in a 1031 Exchange?

Note: Always discuss the transaction with your tax consultant before closing on your sale.

Some basic requirements of a properly structured exchange are:

  • It must be a trade between two parties (Spectrum and the Exchangor are the two parties).
  • Qualified Intermediary must acquire and transfer both the Relinquished and the Replacement Property (done via an Assignment prepared by Spectrum).
  • Exchangor and Qualified Intermediary must enter into an Exchange Agreement outlining the duties and requirements of both parties which includes a restriction on the Exchangor's actual or constructive receipt of the sale proceeds (prepared by Spectrum).
  • Proper identification of potential acquisition properties and completion of the exchange within the prescribed time deadlines (Spectrum will provide detailed instructions and forms). Briefly stated:
  • The exchange period begins the day Spectrum transfers the relinquished property to the new owner. The investor then has 45 days within which to identify potential acquisition properties. Thereafter the actual property(s) must be acquired by Spectrum within 180 days of the sale date or the investor's tax filing deadline, whichever is sooner.

DUE TO CONTINUING IRS CHANGES the calculator has been removed Please consult with us for an estimate of Your Benifits in using a 1031 Exchange.

(Please consult with your CPA PRIOR to exchanging).

Points to remember:
  • Acquire property equal or greater in value and equal or greater in debt (Note: reduction in debt must be offset by an increase in cash NOT an increase in debt). 
  • Equity not reinvested will be taxable.

The taxpayer is advised to seek the advice of a CPA and/or tax consultant regarding all aspects of a 1031 exchange.  Compliance with the rules and regulations contained in IRC 1031 is the sole responsibility of the taxpayer.