Friday, March 02, 2007

 

farm needed for 1031 exchange

I have a client needing to purchase a farm under the 1031 exchange program. In order to sell an investment property and not pay taxes on the gain, the IRS has created a way to reinvest gains incurred on the sale of a property.

In this case my client sold a piece of property and allowed his attorney to hold the proceeds from the sale. Then, this seller has 45 days to close on the purchase of another piece of investment property.

My client wants to purchase a farm between 100 and 200 acres. If the farm is suitable to him, my client will close immediately on this property using the proceeds from prior sale mentioned above.

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Under the rules of a 1031 exchange, I hope the client you mentioned in paragraph 2 DID NOT allow "his attorney" to put this in his own escrow. It is my understanding that MY lawyer, nor MY accountant would be a qualified intermediary if I was to have the benefits of a 1031 exchange. However, I do not give legal advice and would refer you to an attorney and other information on the subject which I would be glad to share with you.
 
Jimmy,

Of course you are correct. In this instance there was an intermediary involved and the attorney did not hold the money.
 
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