It is not unusual that you decided to opt for a 1031 exchange. The majority of business owners are considering this option when they want to purchase a bigger building for their company, or when they want to move the headquarters of the firm. But the thing with this exchange is that if you are not a specialist, you might not be able to close it successfully, because you might have to deal with some issues. So if you want to access a dst fund, you should ask the support of a professional company, because laws change every day, and they are up to date with every one of them. They could guide you through this complex process and help you avoiding problems. But this does not mean that you should leave it all to the professionals, you should also have knowledge of what this process implies, because it is your business we are talking about.
Exchange the relinquish property with a like-kind one
This is the first thing you have to check when planning to exchange your investment property. For being sure that the 1031 exchange is valid, you have to exchange yours with one of the same kind. The level of improvement of the two properties is not relevant, and all properties, being they buildings or land, are seen as real properties. The following are some examples of like-kind properties, which could be changed: unused land, family rental properties, retail spaces, farms. Make sure that the properties are located within United States, and in case you are not sure if the two properties you want to swap are not like-kind, you should ask a specialist.
Ensure that the properties meet the 1031 conditions
For being eligible for the swap, you have to be sure that both your property and the replacement one are defined as business or trade properties. You should not use any of these properties for personal use, because in this way, you would not be deferred from the taxes, and the process would imply different legal problems. Talk with a 1031 exchange specialist, because they would state you out all the conditions implied by the process.
Check the list with excluded properties
There are certain types of properties you cannot use in a 1031 exchange process, and you have to be sure that none your building or the replacement one are considered this. Here is a list with some properties, which are not eligible for the swap: partnership interests, stock or inventory in trade, notes, bonds, stocks, certificates of trust or other securities.
Meet the deadlines
You have to respect two important deadlines when you are opting for a 1031 exchange. You have 45 days to close the sale on the present property and identify the one you want to replace it with. You have to complete the exchange in 180 days from the date you are starting the process. Take notice that these periods include holidays, business days and even weekends.