Frequently Asked Questions

Q: How much do I need to spend on my replacement real estate?

A: This is probably the question that we get asked most often. The answer to this question lies in the Net Selling Price (NSP). Take the contract sales price of your relinquished property, and deduct any Realtor Commissions and Title Fees. What you are left with is the Net Selling Price. That is the “magic number” that you need to spend on the next property to ensure that you defer all capital gains.

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Q: What is considered Investment Real Estate?
 
A: There are a number of options available to investors looking to exchange into Like-kind properties. Here is list of some of those options:

Rental properties
30 Year Leases including options
Raw land
Farms
Office buildings
Shopping centers
Trailer parks
Retail stores
TICs
Marinas

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Q: Who is the the Qualified Intermediary?

A: The Qualified Intermediary (QI) is the independent third party that is required by the IRS to act as the middleman in both the sale and purchase transactions. The QI cannot be the taxpayer, a descendant of the taxpayer, or an agent of the taxpayer (realtor, attorney, accountant, etc.) The role of the QI is to prepare the exchange documents, coordinate with the closing agents for each transaction, and escrow the funds.

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Q: What is the 45 day Rule?

A: The Exchangor must identify any possible replacement properties within 45 days of closing on their relinquished property. If a property has not been properly identified by midnight of the 45th day, the taxpayer will be unable to complete the exchange.

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Q: What is the 180 day Rule?

A: The Exchangor must close on the replacement property by the earliest of either the due date of the tax return (including extensions) for the tax year that the exchange took place, or within 180 days after closing on the relinquished property.

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Q: What does tax deferred mean?

A: When a client reinvests the proceeds from the sale of investment property to another piece of investment property, they defer capital gains tax that would otherwise be due at the time of the sale.

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Q: How do I start an exchange?

A: Call us at (239)333-1031. We will answer any questions that you might have. Once you are ready to start, complete the Client Information Sheet and forward to us with a copy of the fully executed contract for your relinquished property. It’s that simple! Download Client Info Sheet Now!