How
To Begin
A 1031 Exchange
Step 1
Contact Bankers Escrow Corp. immediately to begin the proper 1031
documen-tation, instructions and the coordination of all parties
to the sale, including your real estate agent, title company, lawyer
or closing agent.
Step
2
Aays discuss your 1031 Echange with your tax advisor. Call Bankers
Escrow for sample 1031 assignment language needed in your real estate
contract.
Step 3
Identify the replacement property(s) within 45 days of the closing
of the relinquished property. Earnest money can be taken from your
1031 proceeds held for you by Bankers Escrow Corp.
Step 4
The acquisition of your replacement property must be completed within
180 days of the closing of the relinquished property.
Check
out our web site for more detailed exchange in-formation and
how you can save $100 on your next exchange transaction!
www.bankersescrow.com
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Disasters! IRS Extends 1031 Deadlines by
120 Days for Hurricanes Katrina & Rita
By
Mary Lou Schwab CPA, CES
Acting promptly in response to the massive damage caused by Hurricanes
Katrina and Rita, the IRS announced that victims were eligible for special
tax relief. Portions of Texas (9 counties), Louisiana (73 parishes),
Mississippi (52 counties), and Alabama (6 counties) were covered by numerous
Press Releases. As a result of these Press Releases, taxpayers involved in
tax-deferred exchanges and reverse transactions may be eligible for an extension
of their "time sensitive deadlines". Notice 2005-3 provides for a minimum of
120 days for a 1031 exchange deadline extension under its General Rule extension.
If the 45 or 180 day exchange deadline fell on August 30, 2005 or later for
Katrina or September 23, 2005 or later for Rita, an exchanger can have either their
45 day or 180 deadlines extended. The 120 day extension date for Hurricane Katrina
is Jan. 3, 2006 and for Hurricane Rita the extension date is February 28, 2006.
If you are affected please check the specific information regarding these Press Releases
on the IRS' web page at www.irs.gov.
"Affected taxpayers" include individuals and businesses located in the disaster area,
those whose tax records are located in the disaster area, and relief workers. Reasons
for having "difficulty meeting the time deadlines due to the disaster" include:
- The relinquished or replacement property is in the disaster area;
- The principal place of business of one of the parties involved in the exchange is located in the disaster area, specifically mentioned as parties are the QI, EAT, transferee, settlement attorney/agent, lender/financial institution, and title insurer;
- Any party to the transaction (or an employee involved in the transaction) is killed, injured, or missing as a result of the disaster;
- A document prepared in connection with the exchange (i.e., Exchange Agreement or an assignment or deed) or a relevant land record (i.e., documents at the Recorder's Office) is destroyed, damaged, or lost as a result of the disaster;
- A lender decides to permanently or temporarily suspend funding of loans for real estate closings due to the disaster or due to the unavailability of flood, disaster, or other hazard insurance due to the disaster;
- A title insurer is unable to provide a required title insurance policy at closing due to the disaster; and
- Any similar reason.
A taxpayer qualifies for the General Rule extension if (1) the
relinquished property was transferred on or before the disaster declaration
or if the qualified indicia of ownership have been transferred to the exchange
accommodation titleholder on or before that date; and (2) the taxpayer is an
"affected taxpayer" or has difficulty meeting the time deadlines due to the
disaster.
Additionally, Notice 2005-3 permits a 120 day postponement for delayed exchanges
of the 180 day exchange deadline if, after the end of the 45 day identification
period, the identified replacement property is "substantially damaged" or, in the
case of a safe harbor reverse exchange, the identified relinquished property is
substantially damaged. "Time sensitive acts" include (1) the 45 day identification
deadline and the 180 day exchange deadline for delayed exchanges and (2) the deadlines
set forth in Rev. Proc. 2000-37 for safe harbor reverse exchanges (i.e., the initial 5
day deadline to enter into a QEAA, the 45 day identification deadline, the 180 day
exchange deadline, and the 180 day combination time deadline associated with a combined
reverse/delayed exchange).
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